As the crisis between the United States and Iran continues to disrupt global oil markets, the pump price of Premium Motor Spirit, popularly called petrol, is approaching N1,400 per litre in many parts of Nigeria.
The move came after the US and Iran failed to reach agreement on a ceasefire to allow the Strait of Hormuz to be opened, it was reported.
The Middle East crisis and the reported exit of the United Arab Emirates from the Organisation of the Petroleum Exporting Countries on Tuesday have seen petrol prices continuing to climb.
Brent crude, which was priced at $105 a barrel on Monday, jumped to $118 on Wednesday.
The Dangote Petroleum Refinery has raised the price of petrol at the pump from N1,200 to N1,275 per litre following the hike in crude price.
Petroleumprice price dataA Dangote refinery official confirmed on Wednesday that the refinery has increased its petrol loading price from N1,200 to N1,275 per litre, while coastal supply prices have been raised to N1,215 per litre.
The refinery’s pro forma invoice entry process was halted at about 4pm on Tuesday, a source familiar with the development told Punch, throwing into disarray the normal supply scheduling across its loading system.
The source said the suspension resulted in the immediate halt of the sale of petrol and diesel to marketers.
NNPC Raises Crude Oil Prices
The price increase came after the Nigerian National Petroleum Company Limited (NNPCL) raised the official selling prices of all 37 Nigerian crude grades for May-loading cargoes, Oilprice.com said.
The report said Nigeria is benefiting from the US-Iran war as NNPC raised the price of its flagship grade, Bonny Light, by $6.13 per barrel for May as against April.
“The Iran war is good for Nigeria,” the report said. Nigeria’s state oil company NNPC has hiked the official selling prices of all 37 Nigerian crude grades for May loading cargoes, with its flagship Bonny Light grade rising a hefty $6.13 per barrel versus April, while Forcados is up $7.01 per barrel”.
The development had sparked fears that the Dangote refinery could pay more for crude, leading to higher fuel prices.
Change in Pump Prices at Filling Stations
Checks showed that filling stations increased pump prices from an average of ₦1,250 to over ₦1,300 per litre in Lagos and other South-West states on Wednesday.
In Lagos and Ogun states, petrol sells for between ₦1,315 and ₦1,350 per litre.
NNPC filling stations at the Mowe/Ibafo axis of the Lagos-Ibadan Expressway sold petrol at ₦1,315 per litre, while Mobil sold at ₦1,320 per litre.
In the North and other areas far from the Dangote refinery, prices were higher, petrol was increased to around ₦1,400 per litre.
But residents of Ogun border communities said the Federal Government had not allowed the supply of petroleum products in their areas and petrol was sold for almost ₦1,700 per litre.
Billy Gillis-Harry, the National President, Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), has said that petrol prices may go up further if the crisis in the Middle East does not subside.
“Marketers are facing sudden price volatility to make business decisions, and that is difficult,” he said.
“It’s price volatility, which is what we’re introduced to,” Gillis-Harry said. And the government is not saying anything about it, so it is worrying. At least the government could come up with some measures.
“Now we are seeing some action on the price of crude oil. And they can give some back to reduce the cost of transportation. So food is not going to be expensive, along with some other things. “That’s what we have been proposing.
He warned that if the crisis continues, petrol may rise above N1,500 per litre.
If you go back to our predictions, I said it there because Mr Trump is not very clear as to what he wants, in my opinion. If it is to decimate the Iranian nuclear facility or if it is to take over the crude oil as they are taking over Venezuela’s. “I don’t think we know exactly what he wants. “So we are not sure we are seeing the end of that crisis,” he said.
Retailers want local pricing
Gillis-Harry said Nigeria must do more to boost production and refine more crude locally.
“So we should look at all those areas and improve our production value and production speed so we can at least get 2 million barrels into domestic refining.”
“That’s going to be a lot better because then we will be a refining hub to ensure jobs, to enhance businesses and to make our economy more active.”
“Dangote has increased the price again because he is the lord of the manor. “The Dangote refinery has demonstrated his influence in the downstream sector by changing price. So we will keep adapting.”
The increase in petrol prices was also blamed on the hike in the price of crude by the NNPC, said the PETROAN president.
He said: “Any increase from any quarter is because we don’t do local trading. All Nigerian products are still benchmarked internationally.
“Even when we are buying crude for local refining in naira, the price is still in dollar equivalent. “All it has done is that you are not going to scramble for forex to buy the crude that you are going to refine here.
He urged the government to extend the naira-for-crude privilege to other refineries that are producing or about to produce petrol.
Local refineries have also asked the Federal Government to stop using international pricing benchmarks for crude supplied to domestic refineries.
They said the current structure raises costs and hinders local refining.
Spokesperson for the Crude Oil Refiners Association of Nigeria, Eche Idoko, said crude supplied to local refineries should be priced on a locally-designed arrangement and not Brent.
“If you are using Brent to benchmark our pricing, the factors that are affecting the Brent pricing will still affect the price at which you are landing crude here,” Idoko said.
“We have always said that the elements in Brent that don’t apply to the trade between the local refinery and the oil producers should be discounted. And that’s the real cost of crude for local refineries, just like that.”
One option available to the government was to sell crude to Dangote refinery at a fixed price, said an economist, Bismarck Rewane.
“One of the options that can be looked at is if the Federal Government of Nigeria agrees to sell crude at a certain price to the Dangote refinery and guarantees that the price of refined products does not go up,” he said.
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