Recent developments in the global oil market have raised fresh expectations of a possible drop in petrol prices in Nigeria, following weeks of sharp increases that pushed pump prices to record highs across the country.
Petrol currently sells between ₦1,300 and ₦1,400 per litre in many parts of Nigeria, after a series of upward adjustments triggered by rising crude oil prices and supply disruptions linked to tensions in the Middle East. The surge, which saw prices jump by about ₦500 within a short period, has worsened inflationary pressure, increased transport fares and placed additional strain on households and businesses.
However, global crude oil prices have begun to retreat after peaking above $110 per barrel earlier in the month. Prices have since declined by between eight and 16 per cent, falling below the $100 mark at some point, as fears of a prolonged geopolitical crisis eased. Although the market remains volatile, fluctuating between $90 and $104 per barrel, the recent decline has introduced the possibility of a downward adjustment in fuel prices.
Under Nigeria’s deregulated downstream sector, petrol prices are now largely determined by market forces, particularly international crude oil prices and exchange rates. This marks a significant shift from the previous subsidy regime, where the government absorbed price shocks. With subsidy removed, any drop in crude oil prices is expected to reflect, at least partially, in the cost of petrol.
Industry data already shows a direct link between crude oil movements and domestic petrol pricing. When crude prices eased earlier in March, the Dangote Refinery reduced its ex-depot petrol price by about ₦100 per litre. However, as global oil prices rebounded shortly after, the refinery implemented fresh increases, contributing to the current high pump prices.
The emergence of the 650,000 barrels-per-day Dangote Refinery has significantly altered Nigeria’s fuel supply dynamics. The facility, which can produce up to 50 million litres of petrol daily, is now a major supplier to the domestic market, at a time when national consumption is estimated at between 50 and 60 million litres per day. This development has reduced Nigeria’s dependence on fuel imports, with authorities also moving to prioritise local supply and limit import licences.
Analysts say the shift towards local refining is expected to moderate the impact of global shocks over time, while also improving supply stability. In recent weeks, the refinery has even exported refined products to other African markets, underscoring its growing influence.
Despite these positive signals, experts caution that any reduction in petrol prices may not be immediate. One major factor is the exchange rate, as petroleum products are still priced in dollars. A weak naira could offset gains from falling crude oil prices, limiting the extent of any price relief.
In addition, many marketers are still selling existing stock purchased at higher prices, which could delay adjustments at the pump. Concerns have also been raised about market concentration, with labour unions warning that limited competition in the downstream sector could slow the pace of price reductions.
Furthermore, the global oil market remains highly unpredictable. Any renewed escalation in geopolitical tensions could push crude prices upward again, reversing recent gains and sustaining pressure on domestic fuel prices.
Nigeria’s long-standing reliance on imported refined petroleum products has historically exposed the country to external price shocks, despite being a major crude oil producer. The operationalisation of large-scale local refining capacity is therefore seen as a turning point, with the potential to stabilise supply and improve pricing over the long term.
For now, the recent drop in global oil prices offers a window of relief for consumers. However, the extent and timing of any reduction in petrol prices will depend on a combination of factors, including exchange rate stability, supply dynamics and the direction of the international oil market.
While the outlook suggests that prices may ease, Nigerians may still have to wait for market forces to fully transmit the impact of lower crude oil prices to the pump.
