Nigerians are facing fresh economic strain as the pump price of Premium Motor Spirit (PMS), popularly known as petrol, climbed to about N1,300 per litre in parts of the country.
This followed the latest adjustment in the gantry price of PMS by the Dangote Refinery following the global crude oil prices.
This is just as the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) warned that the price of Premium Motor Spirit (PMS), popularly known as petrol, could rise to nearly N2,000 per litre, while diesel may sell for N3,000 per litre if the ongoing conflict in the Middle East persists.
Daily Trust reports that Dangote had yesterday increased the gantry price of petrol to N1,175 per litre, marking another upward review in fuel pricing.
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The latest adjustment represents the third increase in petrol prices within seven days since the US-Israel and Iran hostilities commenced.
The new price was communicated to petroleum marketers and depot operators on Monday, rising sharply from N995 per litre, which was announced last Friday.
The N180 increase per litre represents an 18.1 per cent jump within three days, raising concerns among marketers and consumers about a likely increase in pump prices across filling stations nationwide.
The refinery also adjusted the gantry price of Automotive Gas Oil (AGO), also known as diesel, to about N1,620 per litre.
Brent Crude peaked to $104.4 per barrel during the day on Monday from $92.69 it sold on Sunday before the price moderated to $99.4 per barrel as of the time of filing this report.
The latest increase in fuel prices has heightened concerns among households, businesses, and transport operators already grappling with high inflation, rising food costs, and a weakening purchasing power.
Dangote assures of PMS supply, justifies price increase
Meanwhile, the Dangote Refinery has justified the recent upward adjustment in PMS prices, noting that Nigeria is not immune to the ongoing global oil market disruption triggered by tensions in the Middle East.
The Managing Director of the Dangote Refinery, David Bird, while briefing newsmen said the surge in crude prices and associated supply chain costs is affecting refineries worldwide.
Bird described the current situation in the global energy market as "unprecedented," with crude oil prices and other supply chain inputs rising sharply within a short period.
He explained that the ripple effect of the crisis is being felt across the global refining industry, including independent refineries such as Dangote Refinery.
"I think it is very clear from global headlines that what is going on in the Middle East is impacting not just the oil price but also gas and LNG. In fact, LNG has arguably been impacted more severely than oil.
"Every input into the global oil and gas supply chain -- freight, insurance, banking and others -- has been affected. These are incredibly volatile times," he said.
Highlighting the speed of the market disruption, Bird said crude oil prices have surged dramatically within a week.
"If you go back just a week ago, oil was hovering in a stable range in the mid-$60s. Now it has touched $118, almost $120. That is almost doubling within a week," he explained.
He noted that such rapid changes inevitably affect refineries globally, including Nigeria's largest refining facility.
"As an independent refiner, we are not immune from those shocks. The domestic refining industry and the global refining industry are exposed to the same global commodity price movements," he said.
Bird explained that contrary to some assumptions, Dangote Refinery does not receive crude oil at discounted rates and is fully exposed to international commodity prices.
He said even under Nigeria's crude-for-naira arrangement, the refinery still buys crude oil from the Nigerian government at international benchmark prices.
"We purchase Nigerian crude from the Nigerian government at international benchmark-related prices," he said.
In addition, he explained that the refinery must pay global market rates for transporting the crude to the facility.
"We pay international freight rates and international insurance rates to bring that crude from the terminal to the refinery," he said.
According to him, crude obtained through the crude-for-naira programme accounts for only about 30 to 35 per cent of the refinery's total crude intake.
According to him, the refinery therefore sources additional Nigerian crude from the international market.
"We are designed around Nigerian crude, so we actively seek additional Nigerian crude cargoes. Those are bought on the open market in US dollars," Bird explained.
He added that the crude often passes through multiple traders before reaching the refinery, increasing the cost.
"Historically, those cargos often change through multiple traders' hands before we get access to them. That adds further costs and premiums to purchasing those barrels."
Beyond Nigerian crude, Bird disclosed that the refinery also processes crude sourced from different regions around the world.
He also revealed that shipping costs have skyrocketed due to the ongoing global tensions.
Providing an illustration, he said the cost of transporting crude oil from Nigerian export terminals to the refinery has risen sharply.
"Previously it would cost about $800,000 per day to bring crude on a tanker from a Nigerian terminal to the refinery," he said, adding, "That has now escalated to about $3.5 million. That is an incredible increase in freight rates."
Bird also noted that many countries are beginning to prioritise domestic fuel supply over exports. He cited China as an example of a country protecting its domestic energy needs.
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"China has a huge refining industry but is largely dependent on Middle Eastern crude. Because they are worried about supply, they have banned exports and prioritised their local market," he said.
According to Bird, Nigeria's domestic refining capability is a major safeguard against fuel scarcity.
Checks by Daily Trust indicated that the current price range of PMS ranged from N1,250 to N1,300 per litre in major cities, including Lagos, Abuja, and parts of the South-West.
Experts say this reflects the realities of the deregulated petroleum market where prices are now largely determined by international crude benchmarks, foreign exchange rates, shipping costs, and local distribution expenses.
For many Nigerians, the development represents yet another blow to already stretched finances. Already, transport fares have begun to rise in several cities as commercial drivers adjust to the higher cost of fuel.
Commuters in Lagos reported that bus fares on some routes have already increased by between 20 and 40 percent within days of the latest petrol price adjustment.
In Lagos, a civil servant told our correspondent that the Magboro to Secretariat which used to be N500 by bus yesterday increased to N1000 while some private vehicles charge N700 and N800.
