Global crude oil prices have been on a steady decline following renewed optimism over a possible peace arrangement between the United States and Iran. Industry analysts say the development, along with expectations of improved stability in the Middle East, could further weaken oil prices in the coming days.
Benchmark crude, which had surged above $120 per barrel in April, has now dropped to about $87 per barrel. The decline is also linked to discussions around reopening key shipping routes such as the Strait of Hormuz, raising hopes for smoother global oil supply flows.
During the height of tensions that began in late February, crude prices had climbed sharply from below $70 to over $100 per barrel, at times peaking above $120, driving up energy costs worldwide.
Falling Crude Spurs Expectations of Cheaper Fuel in Nigeria
In Nigeria, the easing global oil market has revived expectations that petrol prices could decline significantly, potentially dropping to around N900 per litre if the downward trend continues.
Fuel prices had previously climbed from about N830 per litre to as high as N1,300 per litre during the period of elevated crude prices. Diesel and aviation fuel also experienced similar increases, placing pressure on transport operators and airlines.
With crude now trending lower, attention has shifted to whether domestic prices will follow suit. Market watchers say sustained stability in global supply could push retail fuel prices back toward pre-crisis levels, when petrol sold for roughly N800 per litre before the recent geopolitical tensions escalated.
Refinery Adjustments and Market Reactions
Operators also expect pricing adjustments from local suppliers, particularly the Dangote Petroleum Refinery, which recently reduced its petrol gantry price from N1,275 to N1,250 per litre, while lowering diesel from N1,800 to N1,700.
The adjustment followed a previous round of price cuts when crude oil dipped below $100 per barrel at the end of May.
However, industry sources note that while current crude prices suggest room for further reductions, refiners are still processing inventories of higher-cost crude purchased earlier in the year. This could delay immediate large-scale price cuts.
A senior industry source suggested that petrol could eventually fall to around N900 per litre if crude prices remain subdued, though he cautioned that existing expensive stock may slow the pace of reductions.
“Yes, N900/litre petrol is possible if oil prices settle down, but we still have the expensive crude stock in our tanks,” the source confirmed to The PUNCH.
Separately, the Petroleum Retail Outlet Owners Association of Nigeria has projected that reopening the Strait of Hormuz and continued easing of crude prices could push petrol below N1,000 per litre. Speaking in an interview with PUNCH, PETROAN’s Publicity Secretary, Joseph Obele, said fuel prices would decline further as crude oil prices ease.
Obele said: “If the Strait of Hormuz is reopened, Nigerians should expect a very significant reduction in petrol prices. Petrol will fall below N1,000, probably to N900/litre. Don’t forget that the product was N800+ before the Middle East crisis. Now that the war is getting over, we should be expecting a return to that price regime.”
The group also noted that renewed supply stability could trigger stronger competition among marketers, potentially leading to another round of price adjustments across the downstream sector.
