Nigerians have been advised to brace for another increase in the price of Premium Motor Spirit (petrol), the exact amount of which will vary by region across the country.
Pump prices in some stations yesterday increased to N930, but current projections suggest that fuel prices, particularly from the Dangote Refinery, could climb to as high as N1000 from N874 currently.
The increase, as seen in The Punch Newspaper, follows plans by the refinery to invest in producing electricity, as well as the manufacturing of steel and port facilities, in lieu of the overall objective of industrializing Africa and improving domestic energy security.
However, the reason for the fuel price increase is an increase in global crude prices brought on by the conflict in the Middle East.
As of Monday, reports indicated that crude prices stood at $78 per barrel after surging to $82 on Sunday, after the fighting intensified.
“Following the increase by Dangote, the pump price will likely range between N980 and over N1,000 per litre, depending on location and logistics.
This is largely the effect of the recent hike in global crude oil prices,” Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, said in a phone interview.
“Yes, the price has been reviewed. The new gantry price is now N874 per litre from N774. The review became necessary due to changes in global crude fundamentals and replacement costs,” a senior official at the refinery said.
Energy fears concerning the U.S./Israeli-Iranian war
The intensifying conflict in the Middle East is shaking global oil markets, with crude prices already reflecting concerns about future supply interruptions.
Brent crude and the US benchmark West Texas Intermediate have risen dramatically in recent trading sessions, as traders factor in geopolitical risks.
Even before a full-fledged supply disruption, markets have added what analysts call a “risk premium,” an additional cost baked into pricing due to the possibility that shipments from the region could be disrupted.
Some forecasts suggest that if interruptions continue or intensify, oil prices could reach or exceed $100 per barrel.
At the center of these concerns is the Strait of Hormuz, a narrow but strategically important maritime corridor through which nearly one-fifth of the world’s oil supply passes each day.
The Strait is the key export route for major Gulf exporters such as Saudi Arabia, the UAE, Kuwait, Iraq, and Iran itself.
Even minor slowdowns caused by military activity, more inspections, or greater maritime insurance costs might constrain supply expectations and drive prices higher.
