Marketers retain high petrol prices as crude oil crashes to pre-war level

By Obas Esiedesa & Ediri Ejoh

Oil distributors in Nigeria have persistently offered Premium Motor Spirit (PMS), commonly referred to as petrol, at high costs, even as there has been a significant drop in global crude oil prices, reverting to levels seen prior to the onset of the US-Iran conflict.

Brent crude, the global standard used for pricing Nigeria’s oil, decreased to nearly $72.48 per barrel on Thursday, down from approximately $120 per barrel at the peak of the conflict, leading to anticipations of further decreases in petrol prices.

Nevertheless, investigations conducted by Vanguard in Abuja revealed that gas stations predominantly maintained the pricing set during the time of rising crude costs, placing consumers under the strain of elevated transportation and energy expenses.

Prior to the start of the conflict on February 28, petrol was priced between N740 and N930 per litre in Lagos and Abuja. As crude oil prices spiked due to worries about supply interruptions via the Strait of Hormuz, pump prices surged significantly, attaining peaks of N1,403 per litre in certain areas of the Federal Capital Territory.

A survey of stations in Abuja’s Central Area on Thursday indicated that the Nigerian National Petroleum Company Limited (NNPC Ltd.) sold petrol at N1,260 per litre, while TotalEnergies offered it at N1,305 per litre. Conoil's price was N1,320 per litre, with AA Rano and AYM Shafa both at N1,280 per litre. Among the surveyed stations, MRS had the lowest price at N1,240 per litre.

In Lagos, fuel retailers also continued to uphold high pump prices, with petrol stations keeping older rates intact. Market assessment showed that Peridot’s price stood at N1,205 per litre, while MRS also sold at N1,205 per litre, Fatgbems at N1,206 per litre, and Technoil at N1,200 per litre.

This situation persists even with a recent price reduction in ex-depot costs by Dangote Petroleum Refinery, which meets a considerable share of the country’s petrol demand.

Two weeks back, the refinery lowered its ex-gantry price by N75 per litre, equating to six percent, bringing the price down from N1,250 per litre to N1,175 per litre following a drop in crude oil costs to around $82.78 per barrel. However, the refinery has not yet reported any further decrease despite crude prices has decreased by an extra $10 per barrel since then.

Industry expert Henry Adigun of AHA Consultancy expressed that the ongoing reduction in crude oil prices should typically convert into lower ex-depot and retail petrol prices, particularly as supply issues that had led to previous hikes have diminished.

“It is not always straightforward with marketers who seek to maximize profits in every situation,” Adigun remarked.

Brent crude futures for delivery in August declined by $1.06, or 1.44 percent, reaching $72.68 per barrel on Thursday, while US West Texas Intermediate crude reduced by 76 cents, or 1.08 percent, to $69.58 per barrel.

The recent drop mirrors an increase in confidence among traders that oil deliveries through the Strait of Hormuz will proceed without interruption following the ceasefire agreement made between the United States, Israel, and Iran.
As per market analysis, the price of crude oil decreased from $76.75 a barrel on Tuesday to $73.50 a barrel on Wednesday due to reduced worries about interruptions in global oil supply.

This drop has also been bolstered by the anticipation of higher oil production from the Middle East and the potential rise in Iranian shipments following the relaxation of certain U.S. restrictions.

Traffic through the Strait of Hormuz, which carries about 20% of worldwide oil supplies, has seen improvements as Omani officials and international shipping organizations have put in place measures to ease tanker operations.

In addition, Dangote Petroleum Refinery recently revealed a further decrease in the price of Premium Motor Spirit (PMS), widely referred to as petrol, from N1,175 to N1,125 per litre.

This recent price change reflects the refinery's persistent dedication to maintaining price stability, enhancing accessibility, and contributing to Nigeria's energy security goals. The price assessment highlights Dangote Refinery's adaptability to current market trends and its intention to share cost savings with downstream associates and customers.

Dangote Refinery continues to prioritize its overall objective of aiding economic development, increasing fuel availability, and nurturing a more competitive and sustainable oil industry in Nigeria.