Global oil prices surge above $110 amid Middle East tensions – What it means for Ghana

Global oil prices have surged past $110 per barrel for the first time since 2022, rattling financial markets as escalating tensions in the Middle East raise fears of a prolonged disruption to global energy supplies.

Brent crude rose to $114.74 per barrel in early Asian trading on Monday, representing an increase of nearly 24%. The US benchmark Nymex light sweet crude also climbed sharply, gaining more than 26% to reach $114.78.

The price spike follows intensified military strikes by the United States and Israel on targets inside Iran over the weekend, including reported attacks on oil storage facilities. The situation has heightened concerns about supply disruptions in one of the world’s most important energy corridors.

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According to the BBC, roughly 20% of global oil supply normally passes through the Strait of Hormuz, a critical shipping route linking Gulf producers to global markets. However, maritime traffic through the narrow waterway has largely stalled since the conflict escalated.

Markets reacted swiftly to the developments. Oil prices broke through the $100-per-barrel mark almost immediately before climbing further within minutes of Asian trading opening. Analysts warn that if the Strait of Hormuz remains closed for an extended period, global oil prices could climb towards $150 per barrel.

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The surge has already triggered turbulence across global stock markets. Japan’s Nikkei 225 dropped more than 7%, Australia’s ASX 200 fell over 4%, and Hong Kong’s Hang Seng Index declined by more than 3%. South Korea’s Kospi Index recorded one of the sharpest declines, sliding more than 8% and briefly halting trading.

Beyond crude oil, the crisis could also drive up the cost of jet fuel and fertiliser inputs derived from petroleum products. There are also reports that Asian buyers are aggressively securing US liquefied natural gas, with some shipments originally bound for Europe being redirected.

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For Ghana, the impact of rising global oil prices could be mixed.

As an oil-producing country, Ghana could benefit from higher export revenues from offshore fields such as Jubilee, TEN and Sankofa, potentially boosting government earnings.

However, Ghana remains a net importer of refined petroleum products, meaning sustained increases in global oil prices could quickly translate into higher fuel prices at the pump.

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A prolonged surge above $110 per barrel would likely push up the cost of petrol, diesel and liquefied petroleum gas (LPG). This could trigger broader inflationary pressures, affecting transport fares, food prices and industrial production costs.

The development could also place renewed pressure on the Ghana cedi if higher import bills increase demand for foreign currency.

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If the disruption in the Strait of Hormuz proves temporary, the economic impact on Ghana may remain manageable. But if tensions persist and prices move closer to the $150 per barrel levels projected by some analysts, policymakers could face difficult decisions on fuel pricing, inflation control and economic stability.