Crude Oil Price Surge Could Lead to Higher Petrol and Diesel Prices in Nigeria
The prices of premium motor spirit (PMS) and other refined petroleum products in Nigeria may soon rise following a surge in global crude oil prices, particularly Brent crude. As of Monday, Brent crude prices increased to $81.09 per barrel, up from approximately $76 last week, signaling potential price hikes in fuel costs.
This surge in oil prices comes amid ongoing geopolitical tensions, particularly sanctions on Russian oil exports, which have raised concerns about global supply. This development is expected to affect the ex-depot prices of refined petroleum products across Nigeria, as the cost of crude oil directly influences the prices of refined fuels.
The Nigerian government had based its 2025 budget proposal on an oil price benchmark of $75 per barrel, and this recent increase in Brent crude may affect the pricing structure for petroleum products in the country.
Already, the price of automotive gas oil (diesel) has been adjusted by at least N70, rising from N1,050 to N1,120 per litre at Lagos depots. According to data from the Major Energies Marketers Association of Nigeria, the landing cost of petrol stood at N887.51 per litre as of December 19, 2024. However, the ongoing rise in crude oil prices means this cost could climb further in the coming days.
In recent weeks, the price of petrol had seen a reduction, following announcements from the Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPCL) that led to a drop in ex-depot petrol prices. This resulted in retail petrol prices ranging from N935 to N965 per litre, down from the previous N1,040 per litre.
Currently, Nigerians are purchasing petrol at prices between N935 and N1,100 per litre nationwide. However, a rise in crude oil prices could directly impact the prices of goods and services, which are already burdened by high inflation rates. As of November 2024, Nigeria’s headline inflation stood at 34.6%, with food inflation hitting 39.93%, both figures contributing to the country’s ongoing cost-of-living crisis.
Should the upward trend in oil prices continue, it is expected that Nigerians will face even higher prices for fuel, further exacerbating inflationary pressures on essential goods and services.
