S&P: Nigeria’s Petrol Demand Halved after Subsidy Removal

Emmanuel Addeh in Abuja

Nigeria’s petrol demand has halved since President Bola Tinubu scrapped the country’s costly fuel subsidy late May, impacting European refiners who typically sell into the country, a report by S&P Global Commodity Insights, has said.

Imports of the fuel to Nigeria plummeted to 106,000 bpd in July from 205,200 bpd in May, according to data from S&P Global Commodities at Sea, after local fuel prices skyrocketed following Tinubu’s announcement. Total refined product demand has fallen 41 per cent in the same period, the data showed.

Scrapping the long-standing subsidy could save Nigeria as much as N11 trillion ($2.6 billion) in 2023, according to estimates from the World Bank in June, providing relief to a growing government deficit, the report said.

Sinking Nigerian demand, driven by high fuel prices, has also led to a drop-off in demand for European exports, whose refiners had relied on thirsty West African markets.

Aside the ‘prohibitive’ fuel prices which have seen Nigerians buying less, it is believed that smuggling into neighbouring countries has also reduced , if not completely eliminated, since it’s now unprofitable to do so.

“There is zero demand (in West Africa) at the moment,” a source in the region said. Another European market source said: “Considering the (Nigerian) subsidy removal … demand is indeed depressed.”

The subsidy removal has shaken up longstanding arbitrage for European refiners. While Nigerian demand in particular has diminished, other destinations have picked up the slack, the report stated.