Barbados’ half year fuel import bill fell by $276 million as global oil prices declined.
The Central Bank of Barbados is keeping an eye on the issue.
This was partly because, as outlined in its updated 2025 outlook by Governor Dr. Kevin Greenidge, “heightened geopolitical tensions in oil-producing regions, the reintroduction of production cuts by OPEC+ members, and the increase in tariff rates by major trading partners, are likely to place upward pressure on local prices”.
The Central Bank’s half-year economic review stateas that while $538.5 million was spent on imported fuel in first half of 2024, this declined to $262.5 million in the first half of this year.
Greenidge said at his recent half-year press conerence that while the domestic outlook remains strong, Barbados “continues to monitor external risks in an uncertain global environment”.
This included “elevated oil prices or new trade barriers also pose risks to import costs and travel sentiment”.
The Central Bank expects inflation to “remain low and stable” this year, but this could be changed for factors including higher oil prices.
In a recent analysis on Global Oil Market Dynamics, Vangie Bhagoo-Ramrattan, head of the economic research unit at First Citizens, observed that “economic uncertainties, geopolitical turmoil, cross border conflicts and erratic trade policies are all factors that continue to contribute to the volatility in the global energy market”.
“The general tone, however, is trending towards a more bearish market despite the ongoing concerns about geopolitical tensions which have in the past caused wide swings in oil prices,” she noted.
“In fact, oil prices fell by around three per cent following Iran’s strike on the United States airbase on Qatar in June 2025, which were intercepted and caused no casualties”.
Driving force
She explored why oil prices have remained relatively subdued, particularly in the current heightened state of cross-border conflicts in regions that are home to some of the world’s key energy market
players.
Her conclusion was that “geopolitical risk premiums, while still embedded in energy prices, seem to be relatively subdued [and] the structural changes in the energy market may be the major driving force behind the suppressed prices in the face of significant flareups of tensions, at least in the recent past”. Bhagoo-Ramrattan also believes that “the prospects for slower economic growth will likely weigh on global demand for oil, putting downward pressure on prices”.
The economist pointed out that “since 2021 when total world consumption marginally exceeded production and prices rose, the global petroleum market has witnessed a glut, whereby supply has consistently exceeded demand, which has resulted in price weakness”.
“The United States Energy Information Administration projects that in 2025 and 2026, the situation will continue as world petroleum production will continue to outstrip consumption. As a result, prices are expected to drop to US$65.20 and US$54.80 per barrel, in 2025 and 2026, respectively,” she said.
“Demand is expected to be constrained by prospects for weaker economic growth amongst some of the largest consumers of petroleum, while at the same time, global supply is rising, due to OPEC’s decision to unwind production cuts, coupled with strong output growth in non-OPEC producers, such as the US, Brazil, Canada and Guyana.”
“Despite the fundamentals of the oil market currently, which point towards lower prices, the threat of escalation in geopolitical tensions and intensified cross-border conflicts can cause substantial supply disruptions and volatility, creating much uncertainty regarding the outlook for global oil prices,” Bhagoo-Ramrattan added.
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