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Rising oil, freight costs test Guyana
…but Pres. Ali says govt. maximising all macro-economic tools available to keep prices low
(Kaieteur News) – The government of Guyana has maximized its adjustments on freight and fuel, President Irfaan Ali disclosed on Thursday at the 136th General Meeting of the Georgetown Chamber of Commerce and Industry (GCCI) at the Guyana Marriott Hotel, Georgetown.
President Ali reminded attendees that no excise tax is charged on fuel while noting that freight cost adjustments are still in effect since the pre-covid period.
“We have never removed that benefit, so we’ll maximize the tools available… macro-economic tools, and here is where social responsibility from businesses comes in. When the state has maximized its tools, the private sector must support,” he said.
The head of state said that freight prices have increased between 20-50%, and air transport has also increased due to 50% of air transport costs being fuel. This, he said, is having a huge impact on the cost of transport whether it be to move services, freight, people or goods.
He revealed that India has already added US$200 on a 20-foot container in some locations adding that there have been freight increases of between 20 per cent to 50 per cent.
“If Qatar is to invoke the force majeure…on the existing contract… because the conditions are there to invoke this, then that will have massive, unbelievable impact on the global economy,” said President Ali.
On Friday, Reuters reported that the price for oil and fuel cargoes smashed record highs as the Iran war chokes Middle East supply. The international news agency said that if cargo of oil is to be purchased in Asia or jet fuel in Europe, record prices would have to be paid.
“Surging oil prices in physical markets – the trading place for oil on ships, rail cars or in storage tanks – have outpaced the already dizzying increases in benchmark futures markets, as refiners and traders across Asia and Europe are snapping up whatever barrels they can secure to plug the enormous supply gap caused by the U.S.-Israeli war on Iran,” the article said.
The article noted that the supply gap is expected to persist following a barrage of attacks on oil-and-gas facilities across the Middle East that has turned into the largest-ever disruption to global energy supplies.
“Iran has also throttled traffic through the Strait of Hormuz, the critical waterway transited by 20% of the world’s oil and gas, with threats to fire on ships that attempt to sail through the narrow strait,” Reuters reported.
It is important to note that oil, gas, and refined products are critical to transportation, shipping and manufacturing industries, and energy supply and price shocks can affect consumers, businesses and economies hard, impairing demand for months or years.
Recently, the We Invest in Nationhood (WIN) party noted that while rising global oil prices triggered by geopolitical tensions could generate billions of dollars in additional revenue for Guyana, higher freight costs may simultaneously drive-up food prices and the overall cost of living.
In a statement, the party said it was seeking to highlight both the opportunities and risks facing Guyana’s economy as tensions in the Middle East continue to influence global oil markets.
WIN noted that Guyana is currently producing about 900,000 barrels of oil per day, and a US$30 increase in oil prices could have significant financial implications for the country.
“Under the current production arrangements, Guyana receives approximately 14.5 per cent of the value of production through its royalty and share of profit oil. Based on current production levels, a US$30 increase in oil prices could generate roughly US$4 million in additional revenue per day for Guyana,” the party said.
At an exchange rate of GYD$208 to US$1, this translates to approximately GYD$830 million daily, or more than GYD$300 billion annually if such price levels persist.
However, WIN cautioned that the same geopolitical tensions pushing oil prices higher could also disrupt major global shipping routes, particularly the Strait of Hormuz, one of the world’s most critical maritime passages.
According to the party, instability in shipping lanes tends to increase freight charges, raise insurance premiums and disrupt global supply chains—factors that could significantly impact countries like Guyana that rely heavily on imported food, agricultural inputs and consumer goods.
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This situation presents a fascinating “double-edged sword” for emerging oil-producing nations like Guyana. On one hand, the US$30 increase in oil prices represents a massive windfall for the national treasury; on the other, the resulting inflation in shipping and manufacturing could impair long-term demand. The Win Party’s caution regarding the disruption of critical maritime passages underscores the need for diversified supply chains that are less dependent on single geographic bottlenecks. For those interested in tracking the daily fluctuations of cargo rates and their impact on international trade agreements, you can see here for updated data and industry reports.