The Dangote Petroleum Refinery has announced an increase in its petrol gantry price, raising it by N121 to a new ex-depot price of N995 per litre. The company attributed this change to the heightened volatility in global crude oil markets.
A senior official from the refinery confirmed the price hike to PREMIUM TIMES on Sunday, clarifying that this adjustment reflects the increased costs of crude oil that is currently being imported. The official pointed out that the ongoing war between the United States and Iran continues to impact crude oil supplies, thus necessitating the price increase.
"Coastal delivery is set at N948, while the gantry price now stands at N995," the official stated, explaining the rationale behind the adjustment. Following this price hike, filling stations in Abuja swiftly updated their retail prices. A recent survey revealed that many stations in the capital began selling petrol for approximately N1,100 per litre, a notable increase compared to the prices observed earlier in the week.
Notably, filling stations such as Conoil and NNPC along Airport Road in Lugbe too raised their prices, with petrol now priced at N1,080 and N1,081 per litre, up from N960. The Sharon filling stations also adjusted their prices to N1,080 per litre on the same day.
The refinery official mentioned that many marketers are sourcing petrol through coastal transportation routes, but he expressed relief that the emergence of the refinery has helped keep prices relatively lower than they might have been otherwise.
This marks the second price increase within four days since the onset of the conflict, occurring as Brent crude oil prices have been highly fluctuating amidst disruptions to crude deliveries through the Strait of Hormuz. In the last 24 hours, Brent crude has surged by at least 7.90 percent, trading at $87.44 per barrel. Analysts are predicting that if the conflict escalates further, prices could soar to $100 per barrel or higher.
The Strait of Hormuz is a crucial maritime corridor, responsible for the export of nearly half of the world’s crude oil and its derivatives. However, transportation and distribution of petroleum products have faced interruptions due to the ongoing conflict in the Gulf region.
PREMIUM TIMES previously reported that the Dangote refinery had enacted a price increase of N100, elevating its ex-depot price from N774 to N874 per litre amid the prevailing uncertainty in global oil markets. This prior adjustment was made discreetly as well.
Furthermore, the refinery provided an explanation days earlier, indicating that the conflict had led to the shutdown of several refineries worldwide and reduced oil output in various regions, which significantly contributed to a global deficit of refined petroleum products.
"The refinery made a measured adjustment of N100 per litre in its ex-depot price of Premium Motor Spirit, constituting an increase of about 12%," stated the company at that time. Despite the price hikes, they noted that the refinery had absorbed a portion of the rising costs to mitigate the adverse effects on the local market.
As indicated, the refinery has absorbed 20 percent of the cost increases for the time being to ease the burden on domestic consumers.
No official announcement has yet been made regarding the current price rise. However, the refinery had remarked on Thursday that the costs associated with procuring crude oil for its operations had risen sharply, highlighting that Nigerian crude oil is trading above the international Brent benchmark.
According to their statement, "Nigerian crude is currently priced between $3 to $6 per barrel higher than the Brent benchmark theme."
In light of growing tensions in the Middle East, Kuwait Petroleum Corporation recently began to scale back oil production and declared force majeure, further complicating the situation given previous reductions in oil and gas outputs from Iraq and Qatar due to disruptions in shipments stemming from the ongoing U.S.-Iran conflict.
The conflict has significantly affected the vital Strait of Hormuz, a key transit route for 20 percent of the world’s oil and LNG supply.
Market analysts have projected that nations such as the United Arab Emirates and Saudi Arabia may soon implement cuts to their oil production as storage capacities become constrained.
Given these ongoing uncertainties, Nigerian consumers may face higher petrol prices in the forthcoming days and weeks, primarily due to the heavy reliance on imported petroleum products. Consequently, it is anticipated that the prices of essential goods and services may experience a surge in response to this increase, compounding the financial struggles faced by many Nigerians amid the nation’s ongoing economic reforms.
Although Nigeria stands to gain from rising global oil prices through enhanced oil revenue as a significant crude producer, most fuel marketers still depend on imported refined products.
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