The Nigerian petroleum market experienced a significant price hike on Monday, July 17, 2023, as the loading cost of Premium Motor Spirit (PMS), commonly known as petrol, and Automotive Gas Oil (AGO), also known as diesel, increased at various depots across the country. This surge in prices is primarily attributed to the rising global crude oil prices, with Brent crude, the international benchmark, reaching $79.76 per barrel on Sunday. This development has triggered concerns about potential ripple effects on pump prices at filling stations nationwide, impacting consumers and the broader economy.
A detailed analysis of petrol price movements at loading depots reveals a consistent upward trend. Several major depots, including Swift, Wosbab, and Sahara, increased their petrol prices to N950 per litre, marking a significant jump from around N907-N910 recorded the previous Friday. Shellplux, a private depot, raised its price to N960 per litre, while Chipet Depot followed suit with a similar increase. Other depots, such as Nipco and Matrix Warri, also adjusted their prices upwards, with increases ranging from N38 to N20 per litre. Even the Dangote refinery, a significant player in the local market, saw an increase in its resale price to retailers, reaching N923 per litre, despite procuring the product at a lower cost of N899 per litre.
The diesel market mirrored the petrol price surge, with notable increases across various depots. Stockgap depot raised its diesel price from N1,080 to N1,150 per litre, while Ibeto Depot implemented a similar increase. Sahara Depot’s diesel price climbed to N1,150 from N1,045. Nipco Depot adjusted its price to N1,150 from N1,120, and Optima Depot implemented a N72 increase, bringing its price to N1,120 per litre. These increases translate to an average surge of 5-10% for diesel and 7-10% for petrol, depending on the specific depot and its location.
Industry experts and market participants have weighed in on the implications of these price increases. Olatide Jeremiah, CEO of petroleumprice.ng, highlighted the direct link between rising Brent crude prices and the increased cost of refined petroleum products at depots. He emphasized that a significant portion of Nigerian oil marketers rely on imports, making them susceptible to fluctuations in global crude prices. This dependence on international markets contributes to the vulnerability of domestic fuel prices.
Bayo Adelaja, another market participant, corroborated the analysis, emphasizing the sharp escalation in depot rates and its direct impact on pump prices. He warned consumers to brace for further price fluctuations in the coming weeks as the market adjusts to the evolving dynamics of crude oil prices and supply chain pressures. These insights underscore the interconnectedness of global energy markets and their influence on local fuel prices in Nigeria.
The consistent upward trend in depot prices raises concerns about the potential impact on consumers and the overall economy. Higher fuel prices translate to increased transportation costs, impacting the price of goods and services across the board. This inflationary pressure can erode purchasing power and negatively affect the standard of living, particularly for vulnerable populations. The volatility in fuel prices underscores the need for long-term strategies to mitigate these impacts and ensure a stable and affordable energy supply for Nigerian consumers.
The Nigerian government and relevant stakeholders face the challenge of navigating these complex market dynamics. Strategies to mitigate the impact of fluctuating global crude oil prices on domestic fuel costs are crucial. These may include exploring alternative energy sources, enhancing local refining capacity, and implementing policies to stabilize fuel prices and protect consumers from excessive price volatility. A proactive and comprehensive approach is essential to ensure sustainable energy access and economic stability in the face of these global market pressures.
