Petrol Prices In Nigeria May Continue To Drop As Global Crude Oil Prices Decline

The price of Premium Motor Spirit (PMS), commonly known as petrol, could see further reductions in Nigeria as global crude oil prices continue their downward trend. Economic analysts suggest that this decline may be sustained if the naira remains stable against the US dollar, a key factor in determining fuel prices in the country.

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Crude Oil Prices Hit 12-Week Low

This week, global crude oil prices fell by approximately two per cent, reaching their lowest levels in 12 weeks. This drop follows reports that the Organisation of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+), including Russia, will proceed with a planned increase in oil production in April.

• Brent crude fell by $1.19 (1.6%), settling at $71.62 per barrel.
• West Texas Intermediate (WTI) crude declined by $1.39 (2%), closing at $68.37 per barrel.

According to Reuters, these price levels represent the lowest since December 6 for Brent crude and December 9 for WTI. The decision by OPEC+ to ramp up oil output has contributed to this price slump, increasing supply in the market.

Petrol Prices Drop Amidst ‘Price War’

In Nigeria, fuel prices are heavily influenced by crude oil costs and exchange rate fluctuations. The recent decline in crude oil prices, coupled with a relatively stable naira, has contributed to a significant reduction in petrol prices.

Last week, Dangote Refinery reduced its ex-depot price of petrol from ₦890 per litre to ₦825 per litre. In response, the Nigerian National Petroleum Company Limited (NNPC) matched Dangote’s pricing, sparking what industry experts have described as a “price war.”

This competitive pricing strategy among fuel suppliers has resulted in lower pump prices, benefitting consumers across the country.

Experts Predict Further Reductions

Economic analyst Paul Alaje has expressed optimism that petrol prices could drop below ₦700 per litre, given the current market conditions. He emphasized that the sustainability of this price drop depends on global crude oil prices and foreign exchange stability.

“It is sustainable to reduce petrol prices to ₦700 based on today’s reality of the exchange rate. The challenge we may have is a global crisis that pushes crude oil prices up. If that happens, we will see a difference. But for now, we are seeing relative stability,” Alaje stated in an interview with Channels Television.

He further noted that current computations suggest that the appropriate pump price for PMS should range between ₦795 and ₦820 per litre.

Future Outlook

If crude oil prices continue to decline and the naira remains stable, petrol prices in Nigeria could see further reductions in the coming weeks. However, potential risks such as global geopolitical tensions, supply chain disruptions, or sudden fluctuations in foreign exchange rates could impact price trends.

For now, Nigerian consumers may benefit from the competitive pricing strategies adopted by fuel suppliers, making petrol more affordable across the country.