The cost of Premium Motor Spirit (PMS), commonly known as petrol, could continue to decrease if the downward trend in crude oil prices persists.
This potential reduction is further supported by the relative stability of the naira against the dollar in the foreign exchange market.
Crude oil prices have witnessed a decline of about two percent, hitting a 12-week low amid reports that OPEC+ will move forward with a scheduled oil production increase in April.
Brent crude futures fell by $1.19, representing a 1.6 percent drop, closing at $71.62 per barrel. Similarly, the United States West Texas Intermediate (WTI) crude recorded a $1.39 decline, or two percent, settling at $68.37 per barrel. These figures mark the lowest closing prices for Brent since December 6 and for WTI since December 9, according to Reuters.
The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, including Russia—collectively known as OPEC+—have reportedly resolved to proceed with their planned production increase in April.
Industry experts in Nigeria’s downstream oil sector emphasize that crude oil prices and exchange rates are the primary factors influencing the cost of refined petroleum products. In response, the Nigerian National Petroleum Company Limited (NNPCL) aligned its pricing with that of the Dangote refinery, sparking what some have termed a “price war.”
Economic analyst Paul Alaje has asserted that the recent reduction in petrol prices is sustainable. He suggested that given current market conditions, petrol prices could decline to below ₦700 per liter. However, he cautioned that a potential global crisis could cause crude oil prices to surge, reversing this trend.
“It is feasible to bring down petrol prices to ₦700 per liter based on the present exchange rate realities. The only challenge would arise if a global crisis causes crude oil prices to rise. If that happens, we will see a different scenario. But for now, we are experiencing relative stability,” Alaje stated during an interview on Channels Television.
He further noted, “Based on our calculations, the price of PMS should range between ₦795 and ₦820 per liter.”
The National President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, echoed similar sentiments, emphasizing that petrol prices will continue to fluctuate in response to changes in exchange rates and international crude oil prices.
While lower crude oil prices typically translate to more affordable fuel for consumers, the current price per barrel remains below the $74 benchmark projected in the Federal Government’s 2025 budget.
