Nigerians could face a steep rise in petrol prices, with projections indicating that the cost per litre may climb to nearly N900 due to fresh sanctions imposed on Iran by the United States.
The sanctions, which have disrupted global oil supplies and triggered a surge in crude oil prices, are expected to significantly impact Nigeria, which remains heavily reliant on imported refined petroleum products.
On Thursday, Brent crude futures rose by 97 cents, or 1.37 percent, to $71.75 per barrel at 10:57 a.m. EDT (14:57 GMT), having gained more than $1 earlier in the session.
The US Treasury Department announced new Iran-related sanctions on Thursday, targeting an individual and several entities, including a Chinese ‘teapot’ oil refinery, for purchasing and processing Iranian crude oil.
Phil Flynn, a senior analyst with the Price Futures Group, said the sanctions provided the push needed to drive prices higher.
“We were looking for some kind of catalyst to move and that was the ticket that pushed us back towards the high,” Flynn said.
Meanwhile, US government data revealed a larger-than-expected drawdown in distillate inventories, including diesel and heating oil, which fell by 2.8 million barrels—well above the 300,000-barrel decline expected in a Reuters poll.
J.P. Morgan analysts noted that despite lower air travel passenger volumes, US oil demand remains strong, adding that reduced travel activity does not reflect broader weakness in demand.
US crude inventories rose by 1.7 million barrels, surpassing the 512,000-barrel increase projected in an earlier Reuters poll.
Kelvin Wong, a senior market analyst at OANDA, predicted that oil prices could experience an uneven upward trend in the short term, driven by geopolitical tensions and economic measures from China.
“I am expecting a choppy upward drift in the oil markets right now,” Wong said.
Tensions in the Middle East have further complicated the situation. Global risk premiums rose after Israel launched a new ground offensive in Gaza on Wednesday, breaking a nearly two-month ceasefire. Additionally, the US has maintained air strikes on Houthi targets in Yemen in retaliation for attacks on Red Sea shipping routes.
J.P. Morgan projected that Brent prices could stabilise in the mid-to-high $70s over the coming months before dipping below $70 and averaging around $73 per barrel by the end of the year.
The surge in global oil prices has already started to affect Nigeria’s domestic petrol market. Data obtained by BusinessDay showed that petrol prices at loading depots rose to N875 per litre on Thursday, up from N852 per litre earlier in the day.
Matrix Warri increased its price from N852 to N875 per litre, while Zamson Depot raised its rate from N853 to N875 per litre. Similarly, Rainoil Depot adjusted its price from N853 to N875 per litre, with Pinnacle Warri and Sobaz increasing their prices to N875 per litre from N854 and N870, respectively.
This development comes after three consecutive petrol price reductions by Dangote Refinery since January. However, Nigerians are now bracing for higher costs at the pump.
On Wednesday, the Dangote Group announced a temporary suspension of petroleum product sales in naira, citing a mismatch between sales proceeds and crude oil purchase obligations, which are currently denominated in US dollars.
In a statement, the company explained: “Dear valued customers, we wish to inform you that the Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in naira. This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in US dollars.”
The refinery clarified that the suspension is temporary and would be lifted once it receives an allocation of naira-denominated crude cargoes from the Nigerian National Petroleum Corporation (NNPC).
The company also denied online reports suggesting that loading operations were suspended due to ticketing fraud, describing the claims as “malicious falsehoods.”
“Our systems are robust, and we have had no fraud issues. We remain committed to serving the Nigerian market efficiently and sustainably,” the statement added.
