New Petrol Prices Emerge In Nigeria After Dangote, Donald Trump's Decisions
- Filling stations nationwide are now expected to adjust their petrol pump prices in the coming days
- Dangote Refinery's decision to stop selling fuel in naira, along with U.S. sanctions on Iran, has changed the petrol market dynamics
- Importers will pay higher prices to bring petroleum products from abroad, and Dangote is now also selling in dollars
Dave Ibemere, a journalist at Legit.ng, has been reporting on business for over ten years. He has deep knowledge of the Nigerian economy, stock market, and general market trends.
Marketers are now expected to increase fuel prices, with costs projected to reach nearly N900 per litre.
The expected increase is due to fresh United States sanctions on Iran, which have disrupted the global oil supply, leading to a rise in crude oil prices.
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Domestically, Dangote Refinery’s decision to halt the sale of petroleum products in naira has further exposed the Nigerian market to shifting global prices.
Why fuel price is set to change
In the international market, Brent crude, the benchmark for Nigeria's oil, has risen to $72.16 per barrel, up from $71.75 per barrel on Thursday.
The increase in oil prices follows the U.S. decision to impose new Iran-related sanctions, targeting entities including a Chinese 'teapot' refinery for purchasing Iranian crude.
Iran, a major oil producer, pumps over three million barrels per day.
Phil Flynn, senior analyst at Price Futures Group was quoted as saying:
“We were looking for some kind of catalyst to move, and that was the ticket that pushed us back towards the high."
The impact of rising crude oil prices could have been less severe if not for Dangote Refinery's decision to temporarily halt the sale of petroleum products in naira.
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From January to March, there have been three price reductions by Dangote Refinery.
Explaining its decision to stop sales in naira, Dangote said it is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in US dollars.
Part of the statement added:
"To date, our sales of petroleum products in Naira have exceeded the value of naira-denominated crude we have received. As a result, we must temporarily adjust our sales currency to align with our crude procurement currency."
Depots adjust prices
Already, In Nigeria, the surge in crude prices has led to increased costs at fuel depots.
Petrol loading prices rose to N875 per litre on Thursday from N852 earlier in the day, according to data from BusinessDay.
Major depots such as Matrix Warri, Zamson, Rainoil, Pinnacle Warri, and Sobaz adjusted their prices upwards.
This marks a shift for Nigerian consumers, who had seen three price reductions by Dangote Refinery since January. The refinery recently suspended sales of petroleum products in naira, citing challenges in aligning revenue with crude procurement costs, which are denominated in U.S. dollars.
J.P. Morgan expects Brent prices to hover in the mid-to-high $70s.
The adjustment in international oil prices means importation will be more expensive, and with Dangote no longer providing respite, fuel prices could return to above N900 per litre.
Oil marketers deny opposing NNPC, Dangote petrol price
Earlier, Legit.ng reported that the Independent Petroleum Marketers Association of Nigeria has denied claims that it opposed the recent reduction in petrol prices.
The Dangote Refinery and the Nigerian National Petroleum Corporation Limited recently reduced petrol pump prices.
There have been reports that oil marketers are unhappy with the reduction due to the losses they incurred from the price changes.
