Another increase in the price of petrol may be announced soon as the cost of crude oil and the estimated landing cost of Premium Motor Spirit (PMS) continue to rise.
The estimated landing cost of petrol has reached ₦1,311.36 per litre, according to the latest report by the Major Energy Marketers Association of Nigeria (MEMAN), putting it ₦46.36 above the ₦1,265 per litre gantry price of the Dangote Petroleum Refinery.
The development comes as Brent crude rose to about $107 per barrel on Thursday, having traded around $100 the previous day. The continued rise in the international oil market is increasing pressure on domestic fuel prices and raising concerns that marketers and refiners may soon review their pump prices.
MEMAN’s figure for September 8 represents a ₦95.02 increase from the 30-day average landing cost of ₦1,216.34 per litre.
The widening gap between the cost of bringing petrol into Nigeria and the current price at which Dangote Refinery sells the product at its gantry could create further pressure on the domestic market if crude oil prices remain elevated.
Petrol prices have already risen considerably in recent months. In some parts of the country, the product is now selling for ₦1,310 or more per litre, compared with about ₦830 before the latest escalation in the international oil market.
The pressure has been linked largely to the disruption of global oil supplies following the continuing conflict involving the United States and Iran.
Before the crisis started on February 28, crude oil was trading below $69 per barrel. The subsequent disruption to oil flows, particularly through the Strait of Hormuz, has since pushed global crude prices sharply higher.
Brent crude gained more than five per cent during Thursday’s trading, moving above $107 per barrel, while West Texas Intermediate also crossed the $100 mark.
The Strait of Hormuz has become a major concern for the global oil market as crude flows through the waterway have dropped sharply. Reports indicate that daily volumes, which had recovered to between six million and nine million barrels in previous weeks, have fallen to below two million barrels.
Shipping activity has also declined, with trackers reporting that no very large crude carriers had exited the strait since early September.
The continued attacks on tankers and commercial vessels in the Persian Gulf and surrounding areas have added to fears that the disruption could last for an extended period. Iran has claimed attacks on several ships, while the United States has confirmed the destruction of some Iranian oil tankers.
With neither side indicating that a ceasefire is imminent, traders have increasingly factored prolonged supply disruptions into oil prices.
The effect is already being felt in Nigeria, where petrol prices are closely influenced by the cost of crude oil, refined products and other supply-related expenses.
Checks in Lagos on Thursday showed that several filling stations were still selling petrol between ₦1,290 and ₦1,310 per litre, although some outlets had moved above that range.
For motorists, another increase would likely translate into higher transportation costs, while businesses that depend heavily on petrol-powered vehicles and generators could also face additional operating expenses.
