While geopolitical tensions between Iran and Israel have raised alarm over potential oil price shocks, Development Economist and Chartered Accountant, Nicholas Issaka Gbana, has said global trends do not support the likelihood of a sharp and sustained rise in oil prices.
Mr. Gbana offered a grounded outlook, stating that “current global trends do not suggest a major spike in oil demand or prices in the short to medium term.”
“I don’t think we have a major risk in the short term. The outlook does not indicate a significant spike in oil prices.”
Nicholas Issaka Gbana, Development Economist and Chartered Accountant
According to Mr. Gbana, structural shifts in global energy consumption are steadily weakening the long-term demand for oil. He pointed to China and Europe’s rapid adoption of electric vehicles (EVs) and supportive climate policies as major factors driving this transformation.
“China’s oil demand has peaked. The country is scaling up big on electric vehicles. Europe is also transitioning.
“So, long-term outlook shows we may not see a big demand for oil.”
Nicholas Issaka Gbana, Development Economist and Chartered Accountant
He also cited ongoing global economic headwinds, including the lingering effects of US-imposed trade tariffs from the Trump era, which have depressed growth across multiple economies and restrained energy demand.
Turning to Ghana’s specific fiscal exposure, Mr. Gbana explained that rising oil prices would have a limited direct impact on government revenue, since petroleum-linked taxes make up only a modest portion of the national tax base.
“Even if oil prices rise significantly, the key risk would be inflationary businesses facing higher costs, lower profits and consequently reduced corporate tax payments.”
Nicholas Issaka Gbana, Development Economist and Chartered Accountant
However, he raised red flags over Ghana’s persistent energy sector legacy debts, especially in light of the government’s decision to defer implementation of a new Energy Sector Levy. That levy was designed to settle outstanding debts owed to Independent Power Producers (IPPs).
“To the extent that the levy is deferred, the debt is not being reduced as planned.
“The IPPs have already threatened to shut down if they are not paid.”
Nicholas Issaka Gbana, Development Economist and Chartered Accountant
IMF Constraints Leave Little Fiscal Flexibility
The discussion also addressed how fluctuations in oil prices could interact with Ghana’s obligations under its ongoing International Monetary Fund (IMF) Extended Credit Facility programme.
“We are under an IMF programme with clear benchmarks. If oil prices rise, I don’t see how the government can avoid passing some of the cost to consumers.”
Nicholas Issaka Gbana, Development Economist and Chartered Accountant
On the spending side, Mr. Gbana warned that a prolonged rise in oil prices would further constrain public finances. With public sector salaries and interest payments largely fixed, the government may be forced to cut capital expenditure and delay arrears clearance to remain within budgetary limits.
Despite these structural vulnerabilities, Mr. Gbana struck a cautiously optimistic tone, noting that crude oil prices have already begun to retreat to near pre-conflict levels following the ceasefire announcement between Iran and Israel.
Industry analysts have echoed similar sentiments, emphasizing that renewed diplomatic engagements and market discipline have dampened speculative price spikes.
Nonetheless, the discussion reinforced the need for Ghana to prioritize energy sector reforms, debt management, and domestic energy resilience in anticipation of future shocks.
While short-term oil price shocks appear manageable, Mr. Gbana reiterated that Ghana’s real challenge lies in its structural economic vulnerabilities. He called for a balanced approach to revenue mobilisation, fiscal discipline, and long-term reforms to insulate the economy from external shocks.
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