Nigeria Braces for Fresh Petrol Price Hike as Global Oil Market Faces Disruptions
Nigerians may soon face yet another increase in petrol prices, with projections indicating that the pump price could climb close to ₦900 per liter. This anticipated hike is linked to recent global developments, particularly fresh sanctions imposed by the United States on Iran, which have disrupted global oil supply chains and sent crude oil prices soaring.
What’s Fueling the Increase?
On Thursday, Brent crude futures rose by 97 cents (1.37%) to $71.75 per barrel, following gains earlier in the session. The jump comes after the U.S. government announced new sanctions targeting Iranian crude buyers, including a Chinese ‘teapot’ refinery and other entities involved in refining Iranian oil. With Iran producing over 3 million barrels of crude oil daily, these sanctions are raising concerns of tighter supply and upward pressure on prices.
Market experts believe the price surge was inevitable. Phil Flynn, a senior analyst at Price Futures Group, pointed out that the sanctions acted as the trigger, sending oil prices higher. Adding to the strain, U.S. data revealed a significant drop in distillate inventories (diesel and heating oil) by 2.8 million barrels, much steeper than the expected 300,000-barrel decrease.
Meanwhile, U.S. crude inventories rose by 1.7 million barrels, exceeding earlier forecasts. Despite concerns over reduced air travel demand in the U.S., analysts at J.P. Morgan insist that global oil demand remains resilient.
Geopolitical Tensions Add to Volatility
Tensions in the Middle East are also contributing to the volatile oil market. Israel’s renewed ground offensive in Gaza, coupled with ongoing U.S. airstrikes on Houthi targets in Yemen, has heightened global risk premiums. Analysts warn that the combination of these geopolitical threats and U.S. sanctions on Iran, Venezuela, and Russia is keeping oil prices unstable.
Impact on Nigeria: Depot Prices Surge
Back home, Nigerians are already feeling the effects. Petrol prices at loading depots jumped on Thursday:
- Matrix Warri increased its price from ₦852 to ₦875 per liter.
- Other marketers like Zamson, Rainoil, Pinnacle Warri, and Sobaz followed suit, adjusting their prices to ₦875 per liter.
This comes despite three consecutive price cuts by Dangote Refinery since January. However, Dangote recently paused selling petroleum products in naira, citing challenges in matching naira revenue with crude purchase costs, which are settled in U.S. dollars.
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What to Expect Next
While there’s hope that Brent crude prices may stabilize in the mid-to-high $70 range over the next few months, analysts forecast they could dip below $70 later in the year, averaging around $73.
Unfortunately, for Nigerians, the immediate outlook points to another wave of fuel price hikes, compounding the existing pressures of inflation and rising living costs.
