Ratings agency, Fitch, has increased its 2021 and 2022 oil price assumptions for the Brent crude due to stronger year-to-date prices, a deficit in the market caused by a recovery in demand, and constrained supply from OPEC+ countries and heightened US capital discipline.
It is therefore forecasting an average $63 and $55 per barrel for 2021 and 2022 respectively.
This would come as a boost to the Ghanaian economy as the nation will rake in extra revenue from petroleum receipts and thereby help narrow albeit slightly the fiscal deficit of Gross Domestic Product.
Oil demand has been improving this year and is likely to continue to grow in second half of this year if vaccination rollouts are successful and pandemic-related restrictions are eased.
"New breakouts, particularly of new Covid-19 variants, remain the main risk for the sustained recovery in demand. Output policies of OPEC+ countries are key to managing oil supply. OPEC+'s planned production increases, originally agreed in April and confirmed in June, will help meet growing demand, but will be insufficient to balance the market in second half of 2021."
OPEC+ has spare capacity of about seven million barrels per day (bpd), which should be sufficient to cover increasing demand in the short term.
However, there is some uncertainty over how quickly production could ramp up relative to the pace of the recovery in demand, which may lead to price volatility.
Furthermore, lifting of the sanctions against Iran could add about 1.5 million bpd of oil, although we believe that OPEC+ could mitigate the impact of additional output from Iran by slowing production increases.
Fitch said despite a rise recently, oil production in the US is still about one million bpd lower than in early 2020.
Ghana bagged $356.25m from oil revenue in second half-year 2021
Ghana received a total amount of $356.25 million oil revenue in the second half of the year, comprising lifting proceeds, surface rentals and corporation income tax.
This was however transferred into the Petroleum Holding Fund (PHF).
According to the Semi Annual Petroleum report (July-December 2020), total petroleum revenue distributed was $316.07 million.
The Ghana National Petroleum Corporation (GNPC) received $118.24 million, the Annual Budget Funding Amount (ABFA) received $103.87 million, whiles the Ghana Stabilization Fund (GSF) and the Ghana Holding Fund (GHF) received an allocation of $65.77 million and $28.19 million respectively during the period under review.