Fresh Concerns over Fuel Price Hike as Oil Surges Past $81/barrel

Emmanuel Addeh in Abuja 

There are fresh concerns that the price of major fuels in Nigeria, especially petrol, could rise in the coming weeks on the back of a surge in crude oil prices, especially Nigeria’s benchmark, Brent, which hit over $81/barrel yesterday.

Brent crude prices rose past $81 per barrel, hitting an over three-month high in early trading, driven by expectations of expanded US sanctions on Russian oil producers, which will disrupt  crude supplies to major importers like China and India.

The US’ action is aimed at curbing the revenue that Moscow uses to fund its war in Ukraine. The US expects the decision to severely hurt Russian oil exports to India and China, pushing the two top buyers to source more oil from the Middle East, Africa and the Americas and providing an upside risks to oil prices. Last week the price of crude oil hovered around $76 last week.

However, the upside is that more revenue is likely to accrue to the country, as oil prices now markedly exceed Nigeria’s 2025 budget proposal benchmark of $75/barrel. 

The ‘price war’ ongoing between Nigeria’s two producers of petrol, the Dangote refinery and the Nigerian National Petroleum Company Limited (NNPC), has recently led to a drop in petrol prices from over N1,000 to less than than N1,000 per litre in many parts of Nigeria.

A key cost centre for crude oil refiners, the expectation is that this current rise in global crude oil price may directly lead to an increase in the prices of petrol, diesel, jet fuel, kerosene, among others, if the trend continues.

For years, Nigeria had imported all its fuels, until recently when the 650,000 barrels per day Dangote refinery began production and was followed by the NNPC-owned Port Harcourt refinery as well as the Warri facility.