Kenya shilling, Ghana cedi face new pressure as crude surges

The Kenya shilling and Ghana cedi are bracing for fresh turbulence as a war-driven surge in global crude oil prices amplifies dollar demand across two of sub-Saharan Africa’s most fuel-reliant economies.

With Brent crude climbing more than 30% since the outbreak of U.S.-Israeli military strikes on Iran last month, the shock is rapidly feeding into import bills, weakening currencies and threatening to reignite inflation that both countries had only recently begun to tame.

The shilling was trading at around KSh 129.00 per USD this week, a level that has held relatively steady in recent months — but traders and analysts warn that prolonged elevated crude prices could quickly erode that stability. In Ghana, the cedi has been on a more precarious footing, having already slipped to around 12.50 per USD, pressured by persistent demand from manufacturers, energy firms and service companies that cannot defer their dollar needs.

How the Iran war is driving the oil shock

The conflict, now in its second week, has already suspended roughly 20% of global crude supply transiting the Strait of Hormuz — the narrow corridor through which the world’s oil economy breathes. Iran’s closure of the strait has forced top producers including Saudi Arabia, the United Arab Emirates, Iraq and Kuwait to halt shipments totalling as much as 140 million barrels to global refiners. The Brent benchmark, which began the conflict around $70 a barrel, has since traded as high as $119.50, before settling above $101 as of this week.

“Africa is a net importer of oil products, meaning it is heavily exposed to shocks like these. When global oil supplies tighten, prices rise while African currencies often weaken as investors move funds into safe-haven assets such as the U.S. dollar.”

— Nick Hedley, energy transition analyst, Zero Carbon Analytics

That flight to safety is precisely what makes currency stress in Nairobi and Accra so difficult to contain right now, analysts told Reuters. When crude climbs, oil importers need more dollars to settle energy invoices. Simultaneously, global investors pull back from emerging-market assets, draining foreign exchange reserves that central banks rely on for defence. The two forces compound each other in a way that amplifies the pain far beyond what the price of a barrel alone would suggest.

Kenya exposure: the Gulf oil deal factor

Kenya imports virtually all of its refined petroleum products, leaving its current account — and by extension its currency — acutely sensitive to energy price swings. A deal Nairobi struck with the United Arab Emirates to secure crude supply on deferred payment terms was designed partly to hedge against geopolitical disruption. But analysts have noted that the arrangement locks Kenya into fixed costs that limit its ability to benefit when prices soften, while doing little to insulate it when they surge as dramatically as they have now.

Demand from oil importers has long been a primary driver of shilling weakness. Traders say that pressure is intensifying again. “We are seeing an uptick in demand coming from across all importers, but mainly the oil guys,” one senior commercial bank trader noted in recent weeks. Oxford Economics senior economist Brendon Verster put the dynamic bluntly: the near-term risks for African currencies come mainly from rising oil prices and weakening exchange rates as investors flee to safe-haven assets.

Ghana cedi: a currency already on the back foot

For Ghana, the timing could hardly be worse. The cedi had already been navigating a difficult recovery following a sovereign debt crisis that forced the country into an International Monetary Fund restructuring programme. Although the currency had stabilised somewhat through early 2026, it remains on what traders describe as a “gradual depreciation path” — and a supply shock of this magnitude risks accelerating that slide considerably.

Ghana both produces and imports crude, but like Nigeria, it imports most of its refined petroleum products, meaning it does not capture the full export windfall that a pure oil exporter would see at $100-plus prices. The Bank of Ghana has continued foreign exchange liquidity auctions to dampen volatility, but traders at Stanbic Bank Ghana have cautioned that demand from large corporates, including bulk oil distributors, is outpacing central bank supply — a structural mismatch that can persist for weeks. The immediate concern for ordinary Ghanaians is not the exchange rate itself, but what it means at the fuel pump and in the market stalls where most food and goods arrive by road.

Analysts from Oxford Economics warn that if the Hormuz disruption persists, oil prices could add as much as 0.8 percentage points to global inflation — a figure that lands disproportionately hard on low-income households in Accra and Nairobi, where fuel is not an abstraction but the price of a matatu ride to work or a bag of maize flour off the shelf. For now, both central banks are watching, intervening at the margins and hoping the war ends quickly. The market, for its part, is not betting on it.