Fuel prices in Nigeria may increase in the coming days as the global benchmark for crude oil, Brent, surged to $79.76 per barrel on Sunday. This marks a significant jump from the $72.88 per barrel recorded in December 2024, raising concerns about higher costs for refined petroleum products across the country.
Crude Oil’s Impact on Fuel Prices
As a critical determinant of refined petroleum product prices, the rise in Brent crude has already started to impact Nigerian depots. Market sources revealed that diesel prices increased in several depots on Friday, with analysts attributing the hikes to the global crude oil price surge.
Brent crude serves as a global benchmark for petroleum pricing. When its cost rises, importers are compelled to adjust prices to account for higher procurement, refining, and shipping expenses.
Factors Behind the Crude Price Surge
The recent escalation in crude prices is linked to a combination of geopolitical tensions and seasonal demand fluctuations. Sanctions imposed on Russian oil exports have disrupted global supply chains, while increased fuel demand during colder months in various regions has further driven prices upward.
Depot Price Adjustments
An analysis of price movements at key Nigerian fuel depots revealed significant increases. For instance:
- Nipco Depot in Lagos increased its diesel price by ₦70, rising from ₦1,050 to ₦1,120 per litre on Friday.
- Prudent Depot recorded a rise from ₦1,025 to ₦1,045 per litre.
According to Olatide Jeremiah, an oil and gas expert and CEO of PetroleumPrice.ng, these depot price adjustments signal a broader trend. “The Brent crude price nearing $80 per barrel has already caused selective price increases in some Lagos depots,” Jeremiah stated. He added, “We anticipate further hikes on Monday, as importers align prices with the rising crude costs.”
Government Benchmark and Market Realities
The Federal Government had pegged its oil price benchmark for the 2025 budget at $75 per barrel. However, with crude prices now exceeding this estimate, the ripple effects on the downstream sector are inevitable. Depot owners and oil marketers, who rely heavily on imports, are expected to pass on the increased costs to consumers.
Industry Implications
Rising fuel prices could exacerbate the challenges faced by businesses and households already grappling with inflation. Diesel, in particular, is critical for powering industries, commercial vehicles, and generators in a country with intermittent electricity supply.
Analysts warn that if crude prices continue on an upward trajectory, the cost of living and operational expenses for businesses may rise significantly. This underscores the need for proactive measures by the government to stabilize fuel prices and cushion the economic impact on citizens.
