Brent Crude Hits $95: Fresh Threat Looms Over Nigeria’s Petrol Prices

Global crude prices surged past $95 per barrel this week following US strikes on Iranian targets near the Strait of Hormuz, triggering another round of petrol price increases as Dangote Refinery raised its gantry price to ₦1,265 per litre — the third adjustment in eight days.

A Perfect Storm of Geopolitics and Market Forces

Nigerian motorists are bracing for yet another round of petrol price increases as Brent crude oil prices surged past $95 per barrel this week, reaching their highest level since late July.

The spike, which saw benchmark indices jump about 5% in a single trading day, was triggered by escalating geopolitical tensions near the Strait of Hormuz after US forces attacked Iranian targets.

Traders are now pricing in the risk of a prolonged confrontation that could disrupt the corridor’s daily flow of about 17 million barrels of crude oil.

Brent crude traded around $95 per barrel on Wednesday, its highest level since July 23.

Dangote Refinery Adjusts Prices — Again

The impact is already being felt locally.

Dangote Refinery, which has reshaped Nigeria’s downstream market since commencing operations, raised its Premium Motor Spirit (PMS) gantry price to ₦1,265 per litre on Saturday, August 29, a ₦65 increase from the previous price of ₦1,200.

The latest adjustment came only three days after the company increased the price from ₦1,185 to ₦1,200 per litre. It was the third price adjustment by the refinery in eight days.

On August 21, the company had raised its gantry price from ₦1,165 to ₦1,185 per litre.

In all, the three adjustments have added ₦100 to the price of petrol at the refinery’s gantry, representing an 8.6 per cent increase within just eight days.

Marketers Pass on Costs to Consumers

The latest increase has since begun to reverberate across the downstream market, with petrol prices varying from one location to another as marketers factor in transportation, logistics and other distribution costs.

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In some parts of Lagos and Ogun, petrol has been reported at about ₦1,310 per litre, while prices in some northern states and areas farther from the refinery have climbed to ₦1,350 and above.

In some locations, the product is approaching ₦1,400 per litre.

Imported Fuel Still Dominates Supply

Despite Dangote Refinery’s capacity exceeding domestic demand, imported fuel still accounted for over 40% of Nigeria’s petrol supply in July.

Reuters reported recently that between 30 and 40 per cent of the crude processed by the Dangote refinery is imported, despite Nigeria being a major crude oil producer.

The renewed price increase is coming at a particularly sensitive time for Nigerians, many of whom are still struggling with the impact of the removal of the petrol subsidy in 2023.

The subsidy removal fundamentally altered the petroleum pricing regime, exposing consumers to movements in crude oil prices, foreign exchange rates and other market costs.

NLC Rejects the Hike

The Nigeria Labour Congress (NLC) has condemned the latest increase, describing it as “avoidable and unacceptable” and questioning why the Federal Government has not done more to ensure that the Dangote Refinery gets adequate supplies of Nigerian crude.

“This adds to the increasing difficulties of the average Nigerian for whom life has been Hobbesian,” said Benson Upah, the Acting General Secretary of the NLC.

He argued that the latest increase was difficult to justify, particularly against the backdrop of developments in the international oil market and Nigeria’s growing domestic refining capacity.

“The latest increase is avoidable and unacceptable in light of falling prices in the international market and our local capacity to sell more crude oil to Dangote. Why are we not doing so?” Upah asked.

The NLC’s reaction sets the stage for a potential showdown with the government, as labour leaders warn that the development would further compound the economic difficulties confronting ordinary Nigerians.