- Diesel Supply Risk Builds as Gulf Producers Risk 60% Output Cuts — COMAC
Ghana faces a growing risk of higher diesel prices and tighter petroleum supply as prolonged disruptions to oil flows through the Strait of Hormuz threaten to force Gulf producers to shut in as much as 60% of their crude output, according to Dr Riverson Oppong, Chief Executive of the Chamber of Oil Marketing Companies.
The warning marks a potentially more disruptive stage in the global energy crisis because the problem is moving beyond higher international crude prices towards the physical ability of producers to export, refine and store oil.
For Ghana, which remains dependent on imported petroleum products, a prolonged disruption could feed directly into pump prices, transport costs, inflation and the import bill, while putting pressure on the macroeconomic gains generated by recent cedi and inflation stability.
“Very soon, the Gulfians are going to reduce crude oil production by 60%. They have no choice because they’re going to produce, they’re not going to have any place to store it because of this shutdown,” Dr Oppong said.
His assessment highlights a less obvious consequence of prolonged disruption around the Strait of Hormuz. Producers can continue pumping crude only for as long as storage tanks, terminals and alternative transport routes can accommodate the output.
Once storage capacity begins to fill and export routes remain constrained, producers can be forced to reduce actual production. A shipping disruption can therefore evolve into a production shock, tightening the amount of crude physically available to global buyers.
The Strait of Hormuz is one of the world’s most important energy corridors, carrying significant volumes of crude oil and liquefied natural gas from Gulf producers to global markets.
The concern is now spreading beyond crude into refined petroleum products.
Dr Oppong said refinery throughput in the Middle East has already weakened, creating pressure on regional diesel production.
“The refinery throughput today in the Middle East has shortened by 110. So it tells you that even diesel production within the Gulf itself has shrunk with the September data we are gathering now,” he said.
That distinction matters because crude oil and refined petroleum products are not interchangeable.
Even if alternative producers elsewhere in the world are capable of supplying crude, shortages in refining capacity or disruptions to finished-product exports can push diesel prices sharply higher independently of the headline crude benchmark.
For Ghana, diesel is particularly important because it sits deep within the productive economy.
Commercial transport, haulage, agriculture, construction, mining and backup electricity generation depend heavily on the fuel. A sustained rise in diesel prices therefore moves quickly beyond motorists at filling stations and into the cost structures of businesses across the economy.
Higher diesel costs raise the price of moving food from farms to urban markets and manufactured goods from factories and ports to consumers. Transport operators face higher operating expenses, businesses absorb larger logistics bills and households may ultimately confront higher transport fares and consumer prices.
Those second-round effects can make an energy shock considerably more damaging than the original movement in crude prices.
The risk is being compounded by pressure on more than one supply source.
“Never ever have we experienced such an outlook ever in history, where two major sources, the Caspian source and the Strait of Hormuz, or the Gulf source, have both been attacked,” Dr Oppong said.
That combination raises the difficulty for petroleum-importing countries seeking alternative cargoes.
Ghana does not need to source every barrel it consumes directly from the Gulf to be exposed to the disruption. Petroleum is traded through an integrated international market, meaning a shortage in one major producing region increases competition for supplies elsewhere.
Ghanaian importers may therefore face higher cargo prices, shipping costs, insurance premiums and refining margins as buyers compete for increasingly scarce supplies.
The timing creates another test for Ghana’s inflation outlook.
The country has recently benefited from moderating inflation and improved currency stability, helping reduce some of the pressure associated with imported goods.
Oil remains one of the most important vulnerabilities because petroleum prices incorporate both international commodity costs and foreign-exchange movements.
A renewed energy shock can therefore reach Ghana through several channels at once: higher dollar-denominated petroleum prices, more expensive shipping and insurance, and potentially stronger demand for foreign currency to finance petroleum imports.
The severity of the economic effect will depend heavily on how long the disruption lasts.
A temporary interruption could still be absorbed through existing inventories, alternative suppliers, strategic reserves and rerouted cargoes. If shipping through Hormuz normalises relatively quickly, some of the risk premium embedded in petroleum markets could ease.
A prolonged physical shortage would be more difficult to manage.
International analysis cited in the document suggests that extended restrictions on Gulf exports could keep physical oil markets tight even after shipping conditions improve because inventories would first need to be rebuilt.
That pushes Ghana’s policy debate beyond the next fuel-pricing window.
The relevant questions increasingly concern the level of domestic fuel stocks, the diversity and reliability of alternative supply arrangements, and whether Ghana possesses sufficient storage and refining capacity to absorb prolonged disruptions in international markets.
Regional refining capacity could also become strategically important.
The expansion of the Dangote refinery in Nigeria, for example, offers the possibility of a closer African source of refined petroleum products. Greater access to regional refining could reduce some of Ghana’s dependence on long-distance refined-product supply chains, although it would not remove exposure to global crude prices.
The wider lesson is therefore about energy security rather than crude prices alone.
If Gulf producers are eventually forced to curtail output on anything approaching the scale anticipated by Dr Oppong, the consequences could extend through transport costs, business operating expenses, household budgets, inflation and eventually monetary policy.
For Ghana, the immediate priority is not necessarily to predict the exact level at which Brent crude will trade next week.
It is to prepare for an international petroleum market in which physical supplies become less predictable and increasingly expensive to move.
The deeper economic test is whether Ghana can use domestic storage, alternative suppliers and emerging regional refining capacity to build a stronger buffer against energy shocks it cannot control.
For an economy attempting to consolidate recent macroeconomic stability, that may ultimately matter more than the next change in pump prices.
