The Crude Oil Refinery Owners Association of Nigeria (CORAN) has indicated that the price of Premium Motor Spirit (petrol) could fall below N400 per litre following the recent significant drop in global crude oil prices.
CORAN argues that with crude oil prices plummeting, there is no logical reason why petrol should not be sold for as low as N350 per litre, especially if crude prices continue their downward trend and eventually settle at around $50 per barrel.
However, despite this potential for price reduction, CORAN has expressed concerns that petrol prices in Nigeria might continue to rise. The association fears that unless the Federal Government sustains the current naira-for-crude deal, the price of petrol will likely increase even if international crude oil prices fall to the $50 mark.
The PUNCH newspaper reported last week that global oil prices experienced a sharp decline, reaching $65 per barrel. This slump was attributed to a combination of factors, including the United States imposing import tariffs and an unexpected increase in supply from OPEC+ nations, which collectively wiped off $10 per barrel from global oil benchmarks. While prices had previously shown some appreciation due to US President Donald Trump’s tariffs on countries buying crude from Venezuela, the overall trend reversed, with Brent crude falling to its lowest level since August 2021. The US West Texas Intermediate crude futures also saw a significant drop.
Market analysts suggest that China’s retaliatory tariffs on US goods have exacerbated trade war tensions, leading investors to increasingly factor in the possibility of a global recession. China, being the world’s largest oil importer, announced additional tariffs of 34 percent on all US goods, effective from April 10th. Furthermore, OPEC+ decided to accelerate plans for output increases, aiming to return 411,000 barrels per day to the market in May, a substantial increase from the previously planned 135,000 barrels per day.
Despite the drop in crude oil prices, the Major Energies Marketers Association of Nigeria disclosed that while the landing cost of petrol had decreased from N885 to N865 per litre as of Saturday, the ex-depot price in Lagos actually rose from N860 to N900 per litre. This indicates a disconnect between the international crude oil market and the domestic refined fuel market in Nigeria.
In an interview with PUNCH, the Publicity Secretary of CORAN, Eche Idoko, voiced his concern over this development, highlighting that while international crude prices are falling, the price of refined fuel in Nigeria is paradoxically increasing even as the naira continues to face pressure and depreciate.
Idoko emphasized that the naira-for-crude policy is crucial for ensuring Nigeria’s energy security and stabilizing the value of the naira. He also lamented that some entities appear determined to continue importing substandard petroleum products into the country, further complicating the situation.
