Nigerians may soon experience a further reduction in the price of Premium Motor Spirit (petrol) as global crude oil prices continue to fall. This potential drop is also being supported by the naira’s recent stability against the US dollar in the foreign exchange market.
Oil prices recently hit a 12-week low, declining by about 2% amid reports that the Organisation of the Petroleum Exporting Countries and its allies, known as OPEC+, will proceed with a planned increase in oil output starting in April. Brent crude futures fell by 1.6% to settle at
71.62perbarrel,whileUSWestTexasIntermediatecrudedroppedby268.37 per barrel, the lowest levels since early December 2023.
This downward trend in crude oil prices, coupled with the naira’s steady performance, is expected to positively impact petrol prices in Nigeria. Industry players in the downstream oil sector have consistently highlighted that crude oil prices and exchange rates are the primary factors influencing the cost of refined petroleum products.
Last week, the Dangote Refinery reduced its ex-depot petrol price from N890 to N825 per litre. Shortly after, the Nigerian National Petroleum Company Limited (NNPCL) matched this price reduction, sparking what many have described as a price war.
Economist Paul Alaje noted that the reduction in petrol prices is sustainable and could even drop below N700 per litre, given current market conditions. “Based on today’s reality of the exchange rate, it is sustainable to reduce petrol prices to N700. The only challenge would be a global crisis that drives crude oil prices up. For now, we are seeing relative stability,” Alaje stated during an appearance on Channels Television.
He added that current computations suggest petrol should ideally be priced between N795 and N820 per litre.
Billy Gillis-Harry, National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), echoed this sentiment, emphasizing that petrol prices will continue to fluctuate based on foreign exchange rates and international crude oil prices.
While lower crude oil prices translate to more affordable fuel for Nigerians, the current price of crude remains below the $74 per barrel benchmark projected by the Federal Government in the 2025 budget. This raises questions about potential adjustments to the budget or further economic implications.
As global oil markets remain volatile, Nigerians are hopeful that the downward trend in crude prices will sustain the recent reductions in petrol costs, providing much-needed relief to consumers.
