Keypoints
- Brent crude is expected to surge above $120 per barrel following the U.S. blockade of the Strait of Hormuz, ending a brief price breather and jolting global energy markets
- Premium Motor Spirit (PMS) prices in Nigeria are projected to hit N1,500 per litre or higher as refiners face increased cost pressures from rising global crude benchmarks
- Dangote Petroleum Refinery continues to face domestic crude supply constraints, requiring 13 to 15 cargoes monthly and forcing reliance on the volatile international market
- Dr. Muda Yusuf (CPPE) and other local economists have condemned a World Bank recommendation to increase fuel import licenses, calling it a “policy reversal” that undermines local refining
Main Story
The global commodity market was rattled yesterday as analysts predicted that crude oil would sustain prices well above $100 per barrel in the second quarter of 2026.
This surge follows President Trump’s announcement of a naval blockade on the Strait of Hormuz, a corridor accounting for nearly a fifth of global crude flows.
Shipping data confirms the disruption, with vessel movement through the strait dropping from a daily average of 125 to just 10 ships since the escalation began.
In Nigeria, the impact is manifesting through the “rockets and feathers” hypothesis, where pump prices remain high despite brief international price dips.
PMS is currently trading near N1,300 per litre, while diesel has reached N2,000 per litre. The Dangote Refinery, now a primary price fixer in the deregulated sector, is expected to adjust ex-depot prices upward as its landing costs for international crude cargoes rise.
Experts warn that for an import-dependent economy already battling a cost-of-living crisis, this renewed volatility could push headline inflation back above the President’s 15 per cent target.
The Issues
The primary challenge for the Federal Government is maintaining market liberalization in the face of soaring energy costs during an election cycle. Policymakers must solve the problem of domestic crude availability for local refiners to reduce their exposure to the $120-per-barrel global market. Furthermore, the social tension arising from a 50 per cent increase in PMS prices since March has led to divided opinions on the return of subsidies. While the World Bank advocates for import competition to cool prices, local experts argue that such a move would erode the gains of current economic reforms and discourage domestic manufacturing.
What’s Being Said
- “The spike in volatility could push the PMS pump prices to N1,500 or above if the tension continues” noted market analysts regarding the Middle East crisis
- Dr. Muda Yusuf stated that following the World Bank’s import recommendation would amount to a policy reversal with negative consequences for market confidence
- “We just need to find a way to create some policy to make sure the social well-being of society is not diminished” stated energy economist Wumi Iledare
- Dr. Ayodele Oni observed that while $127 crude could boost FX earnings, it acts as a “double whammy” for Nigerians facing high living expenses
What’s Next
- President Bola Tinubu is expected to remain resolute on pro-market reforms despite the growing populist demand for a temporary return to fuel subsidies
- The Dangote Refinery is likely to announce new ex-depot price adjustments this week as it negotiates for more of the 13 to 15 monthly crude cargoes it requires
- The World Bank may re-release its Nigeria Development Update (NDU) following the controversy surrounding its recommendation for increased import licenses
- A meeting of the National Economic Council is anticipated to discuss social safety nets to protect household budgets from the expected surge in transport and production costs
Bottom Line
The U.S. blockade has transformed a regional conflict into a direct threat to Nigeria’s fiscal stability. As crude prices target $120, the resilience of the nation’s deregulated downstream sector—and the political determination of the Tinubu administration—will be tested like never before.
