ELS: MBN360 Extractives/Energy
Ghana’s downstream petroleum sector is bracing for continued uncertainty as renewed tensions in the Middle East threaten to disrupt global oil markets and complicate fuel pricing decisions for import-dependent economies.
The Chief Executive Officer of the Chamber of Oil Marketing Companies (COMAC), Dr Riverson Oppong, has warned that the instability surrounding the United States-Iran confrontation could prolong volatility in international petroleum markets, creating further risks for businesses involved in fuel distribution and retail.
The warning comes at a time when global energy markets remain highly sensitive to geopolitical developments, with investors closely monitoring diplomatic efforts, military actions and possible disruptions to crude oil supply.
For Ghana, which relies heavily on imported refined petroleum products, fluctuations in global prices can quickly affect the cost of fuel imports, business margins and pricing decisions across the downstream petroleum industry.
Speaking on JoyNews’ PM Express Business Edition, Dr Oppong said uncertainty has become a major challenge for petroleum businesses, making it increasingly difficult for companies to predict market movements.
Personally, I wasn’t shocked to hear the turnaround of the peace deal because we’ve lived within this uncertainty for the past months, and only Trump knows when he’s going to ceasefire, or probably only Iran knows when they’re actually going to ceasefire.Chief Executive Officer of the Chamber of Oil Marketing Companies (COMAC), Dr Riverson Oppong
Downstream operators exposed to global shocks
The petroleum industry operates within a global market where international developments can quickly influence local conditions.
Although fuel prices in Ghana are determined by several factors, including exchange rate movements, taxes, margins and international benchmarks, crude oil market trends remain one of the major drivers of price changes.
Dr Oppong explained that instability in major oil-producing regions creates challenges throughout the downstream value chain, affecting both Bulk Distribution Companies (BDCs) responsible for importing fuel and Oil Marketing Companies (OMCs) that sell petroleum products to consumers.
According to him, businesses are particularly vulnerable because they must make purchasing decisions based on market conditions that can change significantly within short periods.
The challenge is not only when prices rise, but also when prices decline unexpectedly after companies have already purchased products at higher costs.
Imagine buying at a higher price within a window, and you wake up, and the next window price has gone down. You’ve knocked your price. he explained.Chief Executive Officer of the Chamber of Oil Marketing Companies (COMAC), Dr Riverson Oppong
Why falling prices can hurt industry players
While higher international prices create obvious challenges for consumers, Dr Oppong noted that declining prices can also create financial pressure for petroleum marketers.
When prices increase, businesses may adjust selling prices to reflect higher costs. However, when global prices fall after a company has already imported products at a higher cost, the difference can affect profitability.
As far as revenue is concerned, it is a bit easier when prices are moving up, but when prices are going down, it is a bit deadly, not only to the OMCs but to the BDCs as well.Chief Executive Officer of the Chamber of Oil Marketing Companies (COMAC), Dr Riverson Oppong
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This creates a difficult operating environment for companies that must balance competitive pricing, consumer expectations and the need to maintain sustainable margins.
The situation becomes more challenging during periods of geopolitical uncertainty, when market reactions can be sudden and difficult to anticipate.
Hedging remains difficult for retail fuel businesses
Dr Oppong also highlighted limitations in using financial strategies such as hedging to protect businesses from fuel price movements.
Although hedging is commonly used internationally to reduce exposure to price fluctuations, he noted that applying such strategies within Ghana’s retail petroleum market presents difficulties.
We can talk about hedging and all that stuff, but with the retail business, it’s a bit difficult to hedge.Chief Executive Officer of the Chamber of Oil Marketing Companies (COMAC), Dr Riverson Oppong
The difficulty reflects the realities of Ghana’s downstream market, where businesses operate within frequent pricing cycles and must respond to changing international conditions.
Energy market uncertainty adds pressure on import-dependent economies
The renewed US-Iran tensions have increased concerns about possible disruptions within the global oil supply chain.
The Middle East remains a key region in global energy production, and prolonged instability can influence crude oil prices, transportation costs and market expectations worldwide.
For countries such as Ghana, these external pressures can create additional challenges in managing fuel affordability and maintaining stability within the petroleum sector.
A sustained period of volatility could also affect business planning, as companies may face greater difficulty forecasting import costs and managing inventory decisions.
Building resilience in Ghana’s petroleum sector
The current situation highlights the broader challenge facing fuel-importing countries that remain exposed to international market movements.
While Ghana has limited control over global geopolitical developments, strengthening resilience within the downstream sector remains important for managing external shocks.
Effective planning, efficient regulation and stronger coordination among industry stakeholders can help businesses better navigate periods of uncertainty.
Dr Oppong’s comments underline the need for greater predictability in global energy markets, particularly for countries whose petroleum supply depends significantly on international trade.
Until there is greater clarity around the direction of the Middle East crisis, Ghana’s downstream petroleum sector is expected to continue operating in an environment where sudden market changes remain a major risk.
The development reinforces the importance of preparing the industry to withstand external disruptions while ensuring that fuel supply remains reliable for consumers and businesses.
