 Executive Director for the Institute of Energy Security, IES Paa Kwasi Anamua Sakyi says the 8.9% drop in Brent Crude will affect the revenue of Ghana.
According to him, the drop will not only affect oil producers in Ghana but the country itself.
The price of US oil has turned negative for the first time in history.
That means oil producers are paying buyers to take the commodity off their hands over fears that storage capacity could run out in May.
Paa Kwasi Anamua Sakyi in a radio interview on the implications of the drop said this will mean that all oil producers in the world will need to stop producing.
"We are certain that within the next few days it will correct itself because the...will be positive and above 20 dollars per barrel. I don't see much concern because of the exceptional case in the US, however, we also saw brent crude stumble by most that 8% today it means that if we don't halt production or production across the globe then, of course, we will see more of excess supply..."
Highlighting the possible effect on Ghana, he said: "that means that the benchmark that Ghana also sell their product will also fall and that will mean that either all oil producers in Ghana have to shut down or they will also have to be prepared to sell at a lower cost and that also means a low revenue for not just the oil producers but for Ghana."
US oil prices turn negative as demand dries up
The price of US oil has turned negative for the first time in history.
That means oil producers are paying buyers to take the commodity off their hands over fears that storage capacity could run out in May.
Demand for oil has all but dried up as lockdowns across the world have kept people inside.
As a result, oil firms have resorted to renting tankers to store the surplus supply and that has forced the price of US oil into negative territory.
The price of a barrel of West Texas Intermediate (WTI), the benchmark for US oil, fell as low as minus $37.63 a barrel.
The severe drop on Monday was driven in part by a technicality of the global oil market. Oil is traded on its future price and May futures contracts are due to expire on Tuesday. Traders were keen to offload those holdings to avoid having to take delivery of the oil and incur storage costs.
June prices for WTI were also down, but trading at above $20 per barrel. Meanwhile, Brent Crude – the benchmark used by Europe and the rest of the world – was also weaker, down 8.9% at less than $26 a barrel.
The oil industry has been struggling with both tumbling demand and in-fighting among producers about reducing output.
Earlier this month, Opec members and its allies finally agreed a record deal to slash global output by about 10%. The deal was the largest cut in oil production ever to have been agreed.
But some analysts said the cuts were not big enough to make a difference.
“It hasn’t taken long for the market to recognise that the Opec+ deal will not, in its present form, be enough to balance oil markets,†said Stephen Innes, chief global market strategist at Axicorp.
The leading exporters – Opec and allies such as Russia – have already agreed to cut production by a record amount.
In the United States and elsewhere, oil-producing businesses have made commercial decisions to cut output. But still the world has more crude oil than it can use.
And it’s not just about whether we can use it. It’s also about whether we can store it until the lockdowns are eased enough to generate some additional demand for oil products.
Capacity is filling fast on land and at sea. As that process continues it’s likely to bear down further on prices.
It will take a recovery in demand to really turn the market round and that will depend on how the health crisis unfolds.
There will be further supply cuts as private sector producers respond to the low prices, but it’s hard to see that being on a sufficient scale to have a fundamental impact on the market.
Meanwhile, concern continues to mount that storage facilities in the US will run out of capacity, with stockpiles at Cushing, the main delivery point in the US for oil, rising almost 50% since the start of March, according to ANZ Bank. “We hold some hope for a recovery later this year,†the bank said in its research note.
Mr Innes said: “It’s a dump at all cost as no one, and I mean no one, wants delivery of oil with Cushing storage facilities filling by the minute.â€