The Chamber of Petroleum Consumers (COPEC) has warned of an impending surge in petroleum product prices from mid-July due to the escalating tensions between Iran and Israel.
According to Mr. Paul Ofori, Head of Research at COPEC, the situation is dire, with Iran’s parliament having passed a resolution to halt fuel transit through the strategic Strait of Hormuz.
Speaking in an interview, Ofori explained that the Strait of Hormuz is a critical waterway for global oil supply, with approximately 50% of China’s oil imports and 18-20% of Europe’s oil supply passing through this route.
Other countries, including Romania, Kuwait, Qatar, the UAE, Yemen, and Saudi Arabia, also rely heavily on this route for their oil supplies.
“If the resolution is implemented, it will have dire consequences on the world oil market,” Ofori cautioned. “The closure of the Strait of Hormuz will significantly impact global oil supply, and Ghana will not be immune to the effects, leading to increased transportation costs and further hardship for citizens from mid-July.”
Ofori predicted that the closure of the Strait of Hormuz would lead to a spike in fuel prices, with demand remaining stable while supply dwindles.
“Suppliers will have to seek alternative routes to reach their destinations, which will undoubtedly drive-up costs,” he added.
Expressing concern about the potential implementation of the resolution, Ofori urged that “we just have to pray that the Iran Security Council doesn’t assent to the resolution.”
Ofori however advised that Ghana should prioritize revamping the Tema Oil Refinery to reduce reliance on external oil supplies. He also called on government to cushion oil refineries to operate more effectively to mitigate the impact of such global crises.
“The current situation is a wake-up call for us as a country to take proactive measures to cushion ourselves against such tough times,” Ofori emphasized.
Iran’s parliament has voted to close the strategically vital Strait of Hormuz, a crucial oil shipping lane, in response to recent US airstrikes on Iranian nuclear facilities. The move, widely seen as symbolic, still requires approval from Iran’s Supreme National Security Council and Supreme Leader Ayatollah Ali Khamenei.
The parliamentary resolution follows US-led Operation Midnight Hammer, which targeted Iran’s Fordo, Natanz, and Isfahan nuclear sites. However, the actual decision to close the Strait of Hormuz rests with Iran’s Supreme National Security Council.
Notably, the US airstrikes were described by US officials as a limited operation aimed at halting uranium enrichment activities. Iranian officials have condemned the action as a violation of international law and vowed to respond.
