Nigeria may continue to experience high petrol prices despite recent declines in global crude oil prices, according to insights linked to the Dangote Petroleum Refinery.
Global market forces still dominant
One of the major reasons for sustained high fuel prices is the strong influence of global oil market dynamics. Even when crude prices drop, the cost of refined products does not immediately follow due to market volatility and supply chain adjustments.
Recent fluctuations driven by geopolitical tensions, particularly in the Middle East, have significantly increased crude oil prices and disrupted supply routes, raising the cost of refining and distribution.
Rising production and logistics costs
The refinery noted that increasing costs associated with shipping, storage, and logistics continue to push up petrol prices. These costs are often tied to international benchmarks and foreign exchange pressures, making local price reductions difficult.
Additionally, ex-depot prices from the refinery have seen multiple upward adjustments in response to rising crude costs, directly influencing pump prices nationwide.
Market liberalisation impact
Nigeria’s deregulated fuel market also means prices are now largely determined by market forces rather than government subsidies. This shift allows marketers to reflect actual costs, including procurement and distribution expenses, in retail prices.
As a result, even when crude oil prices decline, marketers may delay price reductions to recover earlier costs or adjust to supply uncertainties.
Limited impact of crude price drop
Industry data shows that despite crude oil dropping to around $100 per barrel from higher levels, petrol prices have remained above N1,300 per litre in many parts of the country.
This highlights the disconnect between crude oil prices and retail petrol prices, especially in a fully deregulated market.
Supply structure and local refining
The shift towards local refining, led by the Dangote Petroleum Refinery, has reduced dependence on imports but also introduced new pricing dynamics.
With reduced availability of cheaper imported fuel and increased reliance on domestic production, prices are now more sensitive to production costs and global crude supply.
Outlook for consumers
Experts suggest that unless there is sustained stability in global oil markets, improved exchange rates, and lower logistics costs, petrol prices may remain elevated in the near term.
For many Nigerians, this means continued pressure on transportation costs and overall cost of living, even as efforts to stabilise the downstream sector continue.
