As the crisis between the United States and Iran continues to disrupt global oil markets, the pump price of Premium Motor Spirit, popularly called petrol, is nearing ₦1,400 per litre in many parts of Nigeria.
The development came after the US and Iran failed to agree on a ceasefire that could reopen the Strait of Hormuz, it was reported.
Petrol prices have continued to rise amid the lingering Middle East crisis and the reported exit of the United Arab Emirates from the Organisation of the Petroleum Exporting Countries on Tuesday.
Brent crude oil, which was at $105 a barrel on Monday, soared to $118 on Wednesday.
After the rise in crude price, the Dangote Petroleum Refinery increased its price of petrol at the gantry from N1,200 to N1,275 per litre.
Price data from Petroleumprice.ng and confirmation from a Dangote refinery official on Wednesday showed the refinery raised its petrol loading price from ₦1,200 to ₦1,275 a litre while coastal supply prices were increased to ₦1,215 a litre.
According to a source familiar with the development who spoke with Punch, the refinery stopped its pro forma invoice entry process around 4pm on Tuesday, disrupting normal supply scheduling across its loading system.
The suspension resulted in an immediate halt to the sale of both petrol and diesel to marketers, the source said.
NNPC Raises Crude Oil Prices
The price hike followed the Nigerian National Petroleum Company Limited (NNPCL) increase in the official selling prices of all 37 Nigerian crude grades for May-loading cargoes, Oilprice.com reported.
The report said Nigeria was benefiting from the US-Iran war as NNPC hiked the price of its flagship grade, Bonny Light, by $6.13 per barrel for May as against April.
“The Iran war benefits Nigeria,” the report said. Nigeria’s state oil company NNPC has increased the official selling prices of all 37 Nigerian crude grades for cargoes loading in May, with its flagship grade Bonny Light up by a hefty $6.13 per barrel versus April, while Forcados is up by $7.01 per barrel.”
The development had heightened fears that the Dangote refinery could pay more for crude, leading to higher fuel prices.
Filling Stations Change Pump Prices
Checks showed that filling stations increased pump prices from an average of ₦1,250 to over ₦1,300 per litre in Lagos and other South-West states on Wednesday.
In Lagos and Ogun states, petrol sells at between ₦1,315 and ₦1,350 per litre.
At the Mowe/Ibafo axis of the Lagos-Ibadan Expressway, NNPC filling stations sold petrol at ₦1,315 per litre while Mobil sold at ₦1,320 per litre.
In the North and other areas far from the Dangote refinery, prices were higher, with petrol raised to about ₦1,400 per litre.
But residents of Ogun border communities said the Federal Government had not allowed the supply of petroleum products in their areas, and petrol was sold for nearly ₦1,700 per litre.
Billy Gillis-Harry, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), said that petrol prices may continue to rise unless the Middle East crisis is de-escalated.
He said marketers were experiencing sudden price volatility, which had made business decisions difficult.
Gillis-Harry said, “That’s what we’re introduced to, price volatility. And then the government isn’t making any statements about it, so it’s worrisome. At least it could come up with some measures.
“Now we are making some progress on the price of crude oil. And they can give some back to reduce the cost of transportation. So food is not going to be expensive, along with some other things. That is what we have advised.”
He warned that petrol may rise above N1,500 per litre if the crisis continues.
If you go back to our predictions, I said it there because Mr Trump is not very clear as to what he wants, in my opinion. If it is to decimate the Iranian nuclear facility or if it is to take over the crude oil as they are taking over Venezuela’s. I don’t think we know exactly what he wants. “So we are not sure we are seeing the end of that crisis,” he said.
Retailers want local pricing
Gillis-Harry said Nigeria must do more to boost production and refine more crude locally.
“So we should look at all those areas and improve our production value and production speed so we can at least get 2 million barrels into domestic refining.”
“That’s going to be much better because then we will become a refining hub to guarantee jobs, to improve businesses and to make our economy more active.”
“The Dangote refinery has demonstrated his influence in the downstream sector by changing price. “Dangote has increased the price again because he is the lord of the manor. So we will continue to adjust.”
The PETROAN president said the NNPC hike in the price of crude also contributed to the rise in petrol prices.
He said: “Any increase from any quarter is because we don’t do local trading. All Nigerian products are still benchmarked internationally.
“Even if we are buying crude for local refining in naira, the price is still in dollar equivalent. “The only thing it has done is that you’re not going to scramble for forex to buy the crude that you’re going to refine here.”
He called on the government to grant the naira-for-crude privilege to other refineries that are producing or about to produce petrol.
Local refiners have also called on the Federal Government to stop using international pricing benchmarks for crude supplied to the domestic refineries.
They said the current structure raises costs and undermines local refining.
Eche Idoko, spokesperson for the Crude Oil Refiners Association of Nigeria, said that crude supplied to local refineries should be priced using a locally designed arrangement instead of Brent.
“If you are using Brent to benchmark our pricing, the factors that are affecting the Brent pricing will still affect the price at which you are landing crude here,” Idoko said.
“What we have always insisted is that the elements in Brent that do not apply to the trade between the local refinery and the oil producers should be discounted. And that’s the real cost of crude for local refineries, just like that.”
Bismarck Rewane, an economist, said one option available to the government was to sell crude to Dangote refinery at a fixed price.
“One of the options that can be looked at is if the Federal Government of Nigeria agrees to sell crude at a certain price to the Dangote refinery and guarantees that the price of refined products does not go up,” he said.
