Crude oil prices have surged again, with Brent crude, the international benchmark, rising above $110 per barrel. The increase comes amid fresh supply worries and rising geopolitical risks in the Middle East, potentially leading to higher retail petrol prices and transport costs for Nigerians.
Crude Oil Prices Spike Early Monday
Global crude oil prices soared early Monday morning. As of 05:25 WAT on Monday, May 18, Brent crude hit $111.2 per barrel, while US West Texas Intermediate (WTI) crude also increased 2.08% to trade at $107.6 per barrel. The spike follows drone attacks targeting energy infrastructure in the United Arab Emirates and Saudi Arabia.
Why Are Crude Oil Prices Rising?
The recent developments have heightened worries over the Strait of Hormuz, a key global shipping route through which a large proportion of global oil exports passes. This critical chokepoint for energy flows has previously triggered quick oil market responses when threatened. These worries have raised expectations of higher crude oil prices, which could lead marketers to raise petrol prices, reversing recent stability in Nigeria's downstream oil sector.
Impact on Nigeria's Fuel Market
Nigeria's petrol market uses both domestic refining and import parity in its pricing mechanism, making it sensitive to global crude oil prices. In recent weeks, there has been relative stability in depot prices in Nigeria. For example, Lagos depots such as Aiteo, Nipco, and A.A. Rano were trading around N1,208 to N1,210 per litre, while Port Harcourt depots like Sigmund and Bulk Strategic hovered around N1,223 per litre. Warri depots, including Matrix and other suppliers, traded around N1,234 to N1,235 per litre, while Calabar depots remained around N1,223 per litre. The national average depot price had recently declined slightly to below N1,230 per litre from around N1,250 per litre, but current trends suggest this may quickly be reversed by rising crude oil prices.
Olatide Jeremiah, CEO of PetroleumPrice.ng, said: "Crude oil constitutes 80% of production cost of finished products in any part of the world and it dictates the petrol price by refineries and depot owners. The current prices at depots and filling stations could change if petrol prices continue to sell above N100 per barrel."
NNPC Reduces Petrol Prices
Legit.ng earlier reported that the Nigerian National Petroleum Company Limited (NNPCL) retail outlets have reduced the cost of Premium Motor Spirit, also known as petrol. Petrol is now selling at N1,255 per litre, down from N1,330, representing a reduction of N75. While the state-owned oil firm's filling stations in Abuja reduced their prices to N1,295 per litre from N1,361, this means that NNPCL retail outlets cut petrol prices by N71 per litre in Abuja.
