Petrol Prices Set To Increase Again, 3 Events Identified As Major Causes
- The price of petrol at depots, and eventually at filling stations, is set for another round of adjustments
- Another change is expected following the rise in global oil prices, as Ukrainian forces target energy infrastructure in Russia
- So far this year, fuel prices have changed at least 10 times, and another adjustment appears to be on the horizon
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
New fuel prices are now expected among market watchers after crude oil prices climbed on Monday, August 25, as traders forecast supply disruptions.
This follows expectations that the US Government may decide to impose more sanctions on Russia, coupled with Ukraine’s retaliatory attacks on Russian energy infrastructure.
Oil prices, supply disruptions, and potential sanctions are set to play a big role in how much Nigerians pay for fuel in the days ahead.
Source: Getty Images
Reuters report that Brent crude futures rose 40 cents, or 0.6%, to $68.13 by 1200 GMT, and West Texas Intermediate (WTI) crude futures gained 44 cents, or 0.7%, to $64.10 on Monday.
The market is somewhat concerned that these peace negotiations are going nowhere
"The market is somewhat concerned that these peace negotiations are going nowhere."
"The market is looking for supply to exceed demand in the autumn months, but in the short term that's being challenged by a potential geopolitical disruption."
What high prices mean for Nigeria
Nigeria currently operates a deregulated market, with prices influenced by international crude oil prices and the exchange rate.
Currently, fuel retail price averaged N865 per litre at the Nigerian National Petroleum Company Limited (NNPCL) and Dangote refinery partners' filling stations.
Only a few filling stations are selling above N865 per litre in Lagos, while in Abuja, petrol prices are between N880 and N910.
Similarly, ex-depot prices, which are the rates marketers buy currently, average at N820 and N850 per litre.
There has been a slight increase in the last few hours.
Source: Getty Images
Why is Nigeria affected?
Chinedu Ukadike, the Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, said in an interview that price changes are a result of market deregulation. He explained that in a deregulated market, such as Nigeria’s, prices rise and fall in response to several factors.
These include the price of crude oil as the raw material, the prevailing exchange rate, marketers’ supply costs, and others.
Aliko Dangote made a similar point, noting that his refinery purchases supplies from the United States.
This means that the product is pegged to international crude oil prices and the prevailing exchange rate.
Despite the pain of rising fuel prices, higher crude oil prices mean more revenue for the Nigerian government.
Fuel prices in Nigeria remain the lowest across West Africa
Earlier, Legit.ng reported that the Major Energies Marketers Association of Nigeria (MEMAN)(MEMAN) has revealed that Nigerians pay for petrol less compared to many of their West African counterparts.
According to the new report from the average price of petrol in Nigeria is N870, down from the previous price of N890.
This is lower than the cheapest petrol in West Africa, with prices less than half of what is being paid in countries like Senegal and Cameroon, Ivory Coast.
Proofreading by James Ojo, copy editor at Legit.ng.
Source: Legit.ng
