Nigerians are facing fresh pressure from rising petrol prices as Brent crude climbed above $109 per barrel on Monday amid growing tensions around major global oil shipping routes.
Petrol prices have already risen to about N1,400–N1,500 per litre in parts of the country, while diesel sells for around N2,000 per litre.
The rise in crude prices followed the cancellation of a planned meeting between Gulf states and Iran on reopening the Strait of Hormuz, while Yemen’s Houthi fighters launched dozens of missiles and drones at Saudi Arabia’s King Khalid Airbase in Khamis Mushait.
The developments have heightened fears of disruptions to crude oil supplies and the movement of petroleum products through the Strait of Hormuz, one of the world’s major energy shipping routes.
According to Oilprice.com, Brent crude rose by more than three per cent when markets reopened on Monday, trading above $109 per barrel, while West Texas Intermediate crude stood at about $104 per barrel.
The increase is expected to put further pressure on Nigeria’s downstream oil market, where consumers are already dealing with rising petrol prices.
Reports indicate that petrol prices have increased to about N1,400 or N1,500 per litre in some parts of the country following successive increases in the ex-depot and gantry prices of the commodity.
Dangote Petroleum Refinery on Saturday raised its petrol gantry price from N1,265 to N1,350 per litre, an increase of N85 per litre.
It was the fourth upward adjustment in the refinery’s gantry price since August 21, when petrol sold for N1,165 per litre.
In about three weeks, the gantry price increased by N185 per litre, representing a rise of about 15.9 per cent.
The latest increase has raised concerns that petrol prices could climb further if international crude prices continue to rise as the Middle East crisis worsens.
Hormuz crisis
The conflict around the Strait of Hormuz has raised fears of a disruption to global oil supplies.
A drone attack on Friday also reportedly disrupted Saudi Arabia’s East-West pipeline, a major alternative route for transporting crude outside the Strait of Hormuz.
The pipeline has the capacity to transport about seven million barrels of crude per day to the Red Sea port of Yanbu.
A prolonged disruption could therefore affect a significant volume of global oil supplies, particularly if the crisis around Hormuz continues.
The conflict has also extended towards the Bab al-Mandab Strait, with reports that the Houthis captured Perim Island and deployed fighters on the Greater and Lesser Hanish islands.
The Bab al-Mandab is another major international shipping route through which crude oil, liquefied natural gas and other goods are transported.
The simultaneous pressure on Hormuz and Bab al-Mandab has heightened concerns that two major energy and trade chokepoints could be affected by the conflict.
For Nigerian consumers, the development comes as households and businesses continue to struggle with higher transportation and living costs.
Any further increase in petrol prices could push up transport fares and increase the cost of moving food, goods and other commodities across the country.
The renewed crude rally has also raised questions about the direction of petrol prices in the coming days, especially if the Middle East crisis causes further disruptions to global oil supplies.
Some Nigerians have appealed to the Federal Government to intervene and prevent further increases in fuel prices, saying higher petrol costs could undermine the gains of the ongoing economic reforms.
The latest development is particularly significant for the Nigerian market following the recent increase in the price of petrol supplied by the Dangote refinery.
The refinery’s N1,350 per litre gantry price is expected to translate into higher pump prices after marketers add transportation, storage, financing and other operational costs.
The development has also renewed debate over the relationship between international crude prices and petrol prices in Nigeria.
Although Brent crude is now above $109 per barrel, it remains below the more than $115 per barrel recorded during an earlier phase of the Middle East crisis.
However, the Dangote refinery’s gantry price has now risen to N1,350 per litre, above the level at which the refinery sold petrol when crude was trading at the earlier peak.
The refinery had previously explained that changes in international crude prices might not immediately reflect in its petrol prices because of the cost of crude inventories already purchased and stored by the company.
With Brent crude rising again, pressure on petrol prices could intensify if the geopolitical crisis persists.
For millions of Nigerians, however, the immediate concern remains the price at filling stations, as higher petrol costs continue to increase the financial burden on households and businesses.
