Nigerians Lament Unchanged Petrol Prices Despite Crude Drop

 

Global crude oil prices have recorded a significant decline in the international market, but pump prices of petrol and transportation fares across Nigeria have remained unchanged. This situation has triggered widespread concerns among citizens over its adverse implications on public purchasing power and the country's rising inflation rate. Consequently, economic stakeholders are intensifying calls for an immediate downward adjustment at filling stations, even as petroleum marketers urge patience, explaining that a drop in crude costs typically takes time to reflect in retail pricing.

In the international energy market, Brent crude has declined to approximately $77 to $78 per barrel following a ceasefire agreement between the United States and Iran, which is expected to gradually normalize oil exports through the critical Strait of Hormuz shipping route. Market analysts have noted that while international oil prices remain under downward pressure, some geopolitical risks persist. Current financial projections suggest that Brent crude will likely fluctuate within the range of $75 to $82 per barrel this week, while West Texas Intermediate crude is estimated to trade between $72 and $79 per barrel.

Despite the global price reduction and the recent decrease in the pump price of the product by the Dangote Petroleum Refinery, most independent marketers operating in Lagos and its environs continue to dispense fuel between N1,235 and N1,300 per litre. Commenting on the development, the Executive Secretary and Chief Executive Officer of the Major Energies Marketers Association of Nigeria, Clement Isong, stated that while the reopening of the Strait of Hormuz is a positive development for global energy markets, its impact on local supply stability and pricing will experience a lag of several months. Isong added, "Given the expected lag of several months, it remains critical that Nigeria strengthens domestic supply resilience to meet the energy demands of its population."

The lack of price symmetry has drawn complaints from local motorists and business owners who bear the financial brunt of the static prices. A commercial driver who plies the Costain to Ikeja route, Aremu Mukaila, lamented that he still bought fuel at the old expensive price on Sunday, adding that there is no cogent reason for him to reduce his transport fares in spite of the drop in crude oil prices. Similarly, a trader in the Idumota area of Lagos, Rasak Aremu, complained that the huge transport fares have taken a heavy toll on his small-scale business operations.

In reaction to these economic challenges, stakeholders in the Nigerian economy have implored domestic refiners, depot owners, and fuel importers to reduce their operational prices. The National President of the Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, stated that the recent decline in global crude oil prices presents an opportunity for stakeholders in the downstream petroleum sector to pass the benefits of lower crude oil costs to Nigerian consumers. He emphasized that prevailing market realities should be quickly reflected in both ex-depot and retail pump prices in the interest of fairness and economic relief for the public.

Gillis-Harry expressed concern that, in some instances, the landing cost of imported petroleum products appears to be lower than the prices offered by domestic refiners. According to him, this development is surprising and underscores the urgent need for a more competitive downstream petroleum market that guarantees consumers access to the most affordable products available. He subsequently implored the Nigerian Midstream and Downstream Petroleum Regulatory Authority to continue issuing import licences to qualified marketers, explaining that increased competition among suppliers would help moderate prices, discourage monopolistic tendencies, and ensure a steady supply of petroleum products across the country.

To further encourage healthy competition that will directly benefit consumers, the association also called on the Group Chief Executive Officer of NNPC Limited, Engr. Bayo Ojulari, to facilitate productive talks with the two Chinese firms that have expressed interest in operating the Port Harcourt and Warri refineries.

Weighing in on the pricing model, an economic analyst, Gbolahan Ogundimu, maintained in a recent social media post that petrol should ideally be sold around N678 per litre based on a crude price of $78 per barrel and the current exchange rate of N1,550 per dollar. Ogundimu noted, "Dangote Refinery is producing locally. We no longer pay for shipping 67,000MT vessels from Rotterdam at $40/tonne. Forex pressure is reduced. If Dangote sells in Naira, NNPCL and marketers don’t need $500M/month to import fuel. That stabilizes the naira. Crude at $78 vs $114. When crude was $114 in 2022, landing cost was N₦1,200/L. At $78, crude cost alone drops by 31%. That must reflect at the pump. Dangote and NNPCL are still pricing based on “import parity” – meaning they benchmark against imported fuel even when they don’t import. That keeps prices at N1,300+ even when the fundamentals have changed."