Crude Oil and Refined Products Market Review and Outlook
Global crude oil prices continue to follow a downward trajectory after rising to a five-month high in April 2024. Crude prices rose from an average of USD81.72/bbl in Q1 to USD90.39/bbl in April before declining to an average of USD79.33/bbl in the second window of June 2024. Tensions between Israel and Iran in the second quarter resulted in an unprecedented surge in global crude oil prices, as was witnessed in April. According to Reuters news agency, global crude prices have been declining in 2024 due to tepid global demand growth, high interest rates, and rising U.S. crude production. These notwithstanding, the International Energy Agency (IEA) has projected that global demand will surge by 1.1 million barrels per day in 2024.
Due to the continual decline in global prices, OPEC+ on June 2 agreed to extend the crude production cut, which was voluntarily instituted by some members of the organization into 2025.
Global prices of petrol, diesel, and LPG fell by 5.49%, 2.82%, and 1.48%, respectively, in the window under review. This represents a year-on-year surge of 4.45% and 19.53% for diesel and LPG, respectively, while petrol witnessed a decline of 2.56% in the same period. On a year-to-date basis, crude oil and petrol rose by 6.80% and 1.33%, respectively, while diesel and LPG declined by 6.93% and 23.44%, respectively.
Although crude and petroleum product prices on the global market continue to decline, the recent depreciation of the cedi against major trading currencies continues to rob local consumers of the benefits of the global decline in prices. Global petroleum prices are expected to decline in the short term due to increasing crude production by the US, slower than expected global demand, and rising interest rates, notwithstanding the voluntary production cuts by some OPEC+ nations.
FuFeX30 and Spot Rates
The Fufex30[1] for the second selling window of May (16th to 30th June 2024) is estimated at GHS15.3500/USD, while the applicable spot rate for cash sales is GHS15.1500/USD based on quotations received from oil financing commercial banks.
[1] The Fufex30 is a 30-day GHS/USD forward fx rate used as a benchmark rate for BIDECs ex-ref price estimations.
| SUMMARY REPORT OF BANK OF GHANA FX AUCTIONS TO BIDECs | ||
| Window | Percentage Offered | Auction FX Rate (GHS/USD) |
| 16th to 29th February 2024 | 23% | 12.4888 |
| 1st to 15th March 2024 | 23% | 12.7291 |
| 16th to 31st March 2024 | 22% | 12.9737 |
| 1st to 15th April 2024 | 30% | 13.1160 |
| 16th to 30th April 2024 | 31% | 13.2259 |
| 1st to 15th May 2024 | 29% | 13.8643 |
| 16th to 31st May 2024 | 30% | 14.1419 |
| 1st to 15th June 2024 | 23% | 14.8388 |
| 16th to 30th June 2024 | 29% | 15.0523 |
The BoG’s bi-weekly FX auction to BIDECs in the 16th to 30th June 2024 pricing window for the purchase of petroleum products was US$20 million, representing 29% of BIDECs’ bid. The FX rate at which the BoG auctioned to BIDECs rose from GHS10.5151 in January to GHS15.0523 per USD in June, representing a depreciation of 43.15% year-to-date. The sharp depreciation of the cedi is currently robbing consumers of the benefits of the global decline in crude and petroleum product prices.
The Ex-Refinery Price Indicator (Xpi)
The Ex-ref price indicator (Xpi) is computed using the referenced international market prices usually adopted by BIDECs, factoring in the CBOD economic breakeven benchmark premium for a given window, and converting from USD/mt to GHS/ltr using the Fufex30 for sales on credit and the spot FX rate for sales on cash.
Ex-ref Price Effective 16th to 30th June 2024
| Price Component | Petrol | Diesel | LPG |
| Average World Market Price (US$/mt) | 804.9300 | 728.5200 | 438.2000 |
| CBOD Benchmark Breakeven Premium (US$/mt) | 120 | 120 | 260 |
| Spot FX Rates | 15.1500 | 15.1500 | 15.1500 |
| FuFex30 (GHS/USD) | 15.2500 | 15.2500 | 15.2500 |
| Volume Conversion Factor (ltr/mt) | 1324.50 | 1183.43 | 1000.00 |
| Ex-ref Price (GHS/ltr) Cash Sales | 10.5796/ltr | 10.8626/ltr | 10.5777/kg |
| Ex-ref Price (GHS/ltr) 45-day Credit Sales | 10.7174/ltr | 11.0060/ltr | 10.7174/kg |
| Price Tolerance | +1%/-1% | +1%/-1% | +1%/-1% |
Taxes, Levies, and Regulatory Margins
Total taxes, levies and regulatory margins within the 1st to 15th June 2024 selling window accounted for 22.52%, 22.26%, and 13.48% of the ex-pump prices of petrol, diesel and LPG, respectively.
| TRM Components | Petrol (GHS/ltr) | Diesel (GHS/ltr) | LPG (GHS/KG) |
| ENERGY DEBT RECOVERY LEVY | 0.49 | 0.49 | 0.41 |
| ROAD FUND LEVY | 0.48 | 0.48 | – |
| ENERGY FUND LEVY | 0.01 | 0.01 | – |
| PRICE STABILISATION & RECOVERY LEVY | 0.16 | 0.14 | 0.14 |
| SANITATION & POLLUTION LEVY | 0.10 | 0.10 | – |
| ENERGY SECTOR RECOVERY LEVY | 0.20 | 0.20 | 0.18 |
| PRIMARY DISTRIBUTION MARGIN | 0.26 | 0.26 | – |
| BOST MARGIN | 0.12 | 0.12 | – |
| FUEL MARKING MARGIN | 0.09 | 0.09 | – |
| SPECIAL PETROLEUM TAX | 0.46 | 0.46 | 0.48 |
| UPPF | 0.90 | 0.90 | 0.85 |
| DISTRIBUTION/PROMOTION MARGIN | – | – | 0.05 |
| TOTAL | 3.27 | 3.25 | 2.11 |
OMC Pricing Performance: 1st to 15th June 2024
Pump prices of petrol, diesel, and LPG have continued to surge since the beginning of the year, primarily due to the depreciation of the cedi.
Although crude and petroleum products prices have been on the decline in the international market, pump prices have escalated to their highest since November 2022, when the GHS/USD rose to about GHS16.00 per USD.
This trend illustrates the unprecedented impact of the FX on the prices of petroleum products at the pumps and the correlation between FX and pump prices.
The Ghanaian cedi has depreciated by an average of over GHS4.0000 against the USD since January 2024, pushing pump prices to their highest in over 15 months.
Pump prices of petrol have increased by over 50% since March 2022 and by over GHS2.40/Ltr on average since January 2024. Petrol pump prices, which averaged GHS9.3390/Ltr in 2022, are currently being quoted at about GHS14.3780/Ltr by some OMCs. This surge is largely attributed to the sharp depreciation of the Cedi.
Pump prices for diesel have also risen above GHS14.80 per liter for the first time since February 2023. Presently, diesel is being sold at an average rate of GHS14.4650/Ltr, compared to GHS12.7450/Ltr and GHS10.2740/Ltr in 2023 and 2022, respectively.
Pump prices of petrol, diesel and LPG are expected to increase slightly in the 16th to 30th June 2024 pricing window due to the depreciation of the cedi against the US dollar. The government and the Central Bank should adopt measures to stem the unprecedented depreciation of the cedi and curb rising pump prices.
