When oil rises but the pump does not rise as much

How Ghana’s exchange-rate stability, disinflation and targeted fuel relief have absorbed part of the 2026 geopolitical oil shock

*Prepared by *

**Institute for Energy Security (IES) | Energy Market Commentary **

The renewed United States–Iran confrontation has turned the Strait of Hormuz from a geopolitical flashpoint into a direct energy-market risk. Reuters reported that vessel traffic through the Strait had fallen dramatically below its pre-war norm, while attacks on regional energy infrastructure and shipping have pushed Brent above US$100 per barrel at points in September. The International Energy Agency has also warned that prolonged Gulf disruption could materially tighten global oil and refined-product supply (Reuters, 2026a, 2026b; International Energy Agency, 2026). For an import-dependent market such as Ghana ( in excess of 60% Petroleum Products), the transmission channel is straightforward: higher international crude and refined-product prices raise the foreign-currency cost of imports; the cedi value of that cost then depends heavily on the exchange rate, and taxes, levies and margins complete the domestic price build-up.

Yet Ghana’s experience in 2026 demonstrates an important distinction between exposure to an external shock and the magnitude of the shock ultimately felt at the pump. The country has not been insulated from the oil shock, fuel prices have risen, but the pass-through has been moderated by three domestic buffers: relative exchange-rate stability, a sharp reduction in inflation compared with the recent past, and targeted temporary intervention in petroleum pricing.

The chronology is instructive. On 16 April 2026, as global petroleum prices were rising amid Middle East tensions, the government introduced a one-month intervention absorbing GH¢2.00 per litre of diesel and GH¢0.36 per litre of petrol. The measure was implemented through adjustments to the petroleum pricing structure rather than a broad-based fiscal subsidy. On 16 May, the diesel support was recalibrated to GH¢1.07 per litre for two pricing windows, while the petrol support ended. The National Petroleum Authority subsequently described the interventions as part of a broader response to geopolitical pressure on energy markets (National Petroleum Authority, 2026).

A second buffer was macroeconomic rather than a direct fuel-price intervention. The cedi entered 2026 from a substantially stronger position than during the severe exchange-rate pressures of 2024. Bank of Ghana data show the interbank end-period rate at GH¢10.95/US$ in January 2026 and GH¢11.25/US$ in August, while the August monthly average was GH¢11.33/US$ (Bank of Ghana, 2026a). More importantly for the September pricing window, there was an improvement in the average interbank rate from GH¢11.80 to GH¢11.52 per US dollar, about a 2.39% appreciation, during the relevant period. A stronger cedi does not cancel a rise in dollar-denominated petroleum prices, but it prevents an additional exchange-rate shock from being layered on top of the international commodity shock.

The inflation environment has also changed the transmission mechanism. Ghana Statistical Service reported headline inflation of 5.0% in August 2026, compared with the much higher inflation environment that previously amplified fuel-price increases into transport, food distribution and business operating costs (Ghana Statistical Service, 2026). Bank of Ghana has attributed the broader disinflation process to tight monetary policy, fiscal consolidation, and the cedi’s recovery, while noting that higher petroleum prices remain an upside risk to inflation (Bank of Ghana, 2026b). Thus, the macroeconomic buffer is not that fuel prices are falling; rather, the second-round effects are being transmitted through an economy with considerably stronger price stability.

The August intervention was particularly significant. The government restored a GH¢2.00-per-litre reduction in the diesel regulatory margin from 4 August. The measure was subsequently extended into the first September pricing window (Ministry of Energy and Green Transition, 2026). The NPA’s first September price floor nevertheless rose: petrol moved from GH¢13.92 to GH¢14.53 per litre (+4.38%), while diesel moved from GH¢15.19 to GH¢15.60 (+2.69%). COMAC projected average pump prices of about GH¢16.39 for petrol and GH¢17.60 for diesel. In other words, the intervention did not eliminate the shock; it reduced the domestic price that would otherwise have been faced by diesel consumers (National Petroleum Authority).

The counterfactual is therefore revealing. If the cedi had been simultaneously depreciating sharply, inflation had remained elevated, and the GH¢2 diesel relief had not been available, the same external oil shock would have entered Ghana’s price system through three reinforcing channels: a higher dollar import bill in cedi terms, stronger domestic cost pass-through, and a larger immediate pump-price adjustment. This comparison deliberately treats the exercise as a stress test rather than a forecast: it compares the observed 2026 buffers with an illustrative adverse scenario of 13% currency depreciation, 15% inflation, and zero diesel relief. The purpose is to show the direction and interaction of the buffers.

A concrete illustration sharpens the point. Star Oil’s ex-pump prices for the second September pricing window — GH¢16.77 per litre for petrol and GH¢17.77 per litre for diesel — provide a real-world anchor. Applying the same stress-test assumptions to these prices, and reversing the GH¢2.00-per-litre diesel relief that currently applies, implies counterfactual pump prices of approximately GH¢19.59 per litre for petrol (+16.8%) and GH¢23.09 per litre for diesel (+29.9%). Diesel is hit harder because the FX swing compounds with the loss of relief that petrol, whose own relief lapsed in May, no longer receives.

Translated into purchasing power, GH¢500 buys about 29.8 litres of petrol or 28.1 litres of diesel at Star Oil’s actual prices today. At the counterfactual prices, the same GH¢500 would have bought only about 25.5 litres of petrol, roughly 4.3 litres, or 14%, less and about 21.7 litres of diesel, roughly 6.5 litres, or 23%, less. This is the practical size of the buffers described above: not a difference in the direction of prices, but a material difference in how far a fixed household or transport budget stretches at the pump.

The policy lesson is not that Ghana’s economy and the downstream petroleum value chain are immune to geopolitical oil shocks. It is that domestic macroeconomic credibility can materially determine the size of the shock transmitted to households. The exchange rate is the first line of defence because petroleum is purchased in foreign currency; inflation stability is the second because it limits the multiplication of a fuel shock through transport, food and services; and targeted relief is the third because it can temporarily prevent the full international increase from reaching vulnerable consumers. The trade-off is that relief financed through margins, levies or taxes reduces fiscal or sectoral revenue and therefore cannot be treated as a permanent substitute for structural energy security.

Indeed, IES maintains its strategic conclusion that, though not over yet, Ghana’s strongest protection against the next Hormuz-type shock is not a permanent subsidy. It is a combination of a resilient cedi, sustained low inflation, adequate strategic petroleum stocks, transparent price-window management, diversified supply routes, domestic refining capacity, and disciplined, time-bound relief when extraordinary shocks occur.