Global crude oil prices experienced a sharp decline, with Brent dropping over 5%, as optimism grew regarding the potential reopening of the Strait of Hormuz. The United States government and Iran are currently engaged in diplomatic talks, aiming to reach an agreement that could ease tensions in the region.
Depot petrol prices in Nigeria currently average between N1,277 and N1,290 per litre across Lagos, Warri, Port Harcourt, and Calabar. If the Strait of Hormuz reopens, analysts suggest that petrol prices in Nigeria could fall in the coming weeks.
Crude Oil Price Drop
The international benchmark for crude oil, Brent, fell by 5.19% to $98.17 per barrel on Monday, May 25, while West Texas Intermediate dropped 5.54% to $91.25, according to Oilprice.com. The Strait of Hormuz, one of the world's most vital oil shipping routes handling nearly a fifth of global supply, has been a focal point of regional tension. Any decline in risk around the waterway typically lowers the risk premium in crude oil prices.
Current Depot Prices
Despite the drop in global crude oil prices, depot prices remained varied. In Lagos, Automotive Gas Oil (AGO) traded around N1,802 per litre on Friday, while Premium Motor Spirit (PMS) was sold at N1,277 per litre, according to traders. In Warri, petrol averaged N1,285 per litre, while AGO was sold at about N1,805 per litre. At depots in Port Harcourt, AGO traded at about N1,810 per litre, while PMS in Calabar was priced at about N1,290 per litre.
Traders noted that price differentials across regions reflect transport and logistics costs, as well as differing supply levels at various depots. If crude prices continue to ease, pump prices could see a downward review, market analysts said, conditional on a stable exchange rate and better supply dynamics, though adjustments may take time.
Market Analysts' Views
A Lagos-based fuel importer commented, "Cargoes in the system were purchased at high costs, so the adjustments would occur gradually." Nigeria's fuel prices remain sensitive to global crude market conditions, currency exchange rates, and import costs, even with increased refining capacity from the Dangote Refinery and other refineries.
NNPC Petrol Prices
Earlier reports indicated that Nigerian National Petroleum Company Limited (NNPCL) retail outlets in Lagos adjusted prices downward as marketers responded to lower ex-depot rates. Checks at NNPC filling stations in Egbeda and Ipaja showed prices ranging from N1,300 to N1,315 per litre, below the official N1,320 price. Most NNPC pump stations fixed prices at N1,300 per litre, while the Ipaja station sold at N1,315 per litre.
These developments offer hope for Nigerian consumers who have faced high fuel costs. The potential reopening of the Strait of Hormuz and ongoing diplomatic talks could lead to further reductions in petrol prices, providing much-needed relief to households and businesses across the country.
