The Crude Oil Refinery Owners Association of Nigeria (CORAN) has stated that the price of Premium Motor Spirit (PMS), commonly known as petrol, could fall below ₦400 per litre due to the recent crash in global crude oil prices.
According to CORAN, if crude prices continue to drop and eventually fall to $50 per barrel, petrol prices could potentially be sold at ₦350 per litre.
However, the association also raised concerns that despite the falling price of crude oil and the reduction in landing costs, petrol prices in Nigeria might continue to rise.
CORAN fears that unless the Nigerian government continues its Naira-for-crude deal, petrol prices will remain high even if crude oil prices fall further.
The price of crude oil has taken a significant dip, with global benchmarks plunging to $65 per barrel last week, the lowest point since 2021.
This decline is largely attributed to a combination of factors, including the U.S. President’s import tariffs on countries purchasing crude from Venezuela, and an unexpected decision by OPEC+ to increase oil output. These developments have caused a $10 per barrel drop in global oil prices, further exacerbating an already unstable market.
Oilprice.com highlighted the combined impact of U.S. tariffs, the ramp-up of production by OPEC+, and China’s retaliatory tariffs on U.S. goods, all contributing to the slump in crude prices.
As of Friday, ICE Brent crude was below $65 per barrel, while U.S. West Texas Intermediate crude futures lost $4.96, or 7.4%, closing at $61.99.
The escalating trade war between the U.S. and China also pressured oil prices, with China imposing additional tariffs of 34% on all U.S. goods starting April 10, further spooking investors about the potential for a global recession.
Despite the reduction in global oil prices, the Nigerian market has not reacted positively, according to CORAN. A recent bulletin from the Major Energies Marketers Association of Nigeria (MEMAN) indicated that the landing cost of petrol dropped from ₦885 per litre to ₦865 as of Saturday.
However, the ex-depot price of petrol in Lagos rose from ₦860 to ₦900 per litre, highlighting the failure of the Nigerian market to reflect the declining cost of crude oil.
The Publicity Secretary of CORAN, Eche Idoko in interview with Punch, expressed concern about the rising petrol prices in Nigeria despite the global reduction in crude prices.
He pointed out that the Naira-for-crude policy, which aims to ensure energy security and stabilize the naira, has become a target for certain individuals who oppose local refining efforts.
Idoko accused some middlemen of trying to prevent the success of local refineries and undermining the Naira-for-crude deal, which he believes is critical to stabilizing both the energy sector and the naira.
CORAN urged the government to continue supporting the Naira-for-crude deal to prevent further instability in fuel prices and to ensure that the country can meet its energy needs without relying on the importation of substandard petroleum products.
According to him, the price of petrol was heading to ₦700 per litre before the naira-for-crude deal was discontinued.
“The price will continue to rise because these middlemen are the elements that want to see that local refining is not sustained. Because when we turned to local refining in this country, we saw the price of petroleum products dropping to as low as ₦700 plus. And it was going to go down more like we promised you guys. I granted an interview to you guys and said that if local refining is ramped up, the price of petroleum products is going to come down. I was even audacious enough to say that we could even see it drop to as low as ₦350. And it was heading towards that because if crude drops to $50, for instance, there’s no way that we won’t sell petrol at about ₦350.
“These are possibilities. Unfortunately, we have middlemen who pride themselves as agents. They have no scheme in the game other than that they have fixed prices because they don’t have risk. All they do is that they connect Nigerian consumers with international traders and then make their money and go away. So, they don’t have anything to lose. They have no investment in this business. They just come in as agents, make money, and then cash out,” he submitted.
Idoko said, “It is foolhardy for anybody to think that in their bid to continue a regime of importing substandard petroleum products, they will thwart the naira-for-crude policy.
“I know that the advisers of President Bola Tinubu, who, incidentally, is the Minister of Petroleum Resources, have been able to analyse where we were before the naira-for-crude policy; where we came to after the implementation of the policy; and where we are heading to after the pilot test of the naira-for-crude policy.
“I hope you know that as we speak, the price of crude in the international market is reducing; meanwhile, the price of refined food in Nigeria is shooting up. It is simply because of the FX effect. And we have simply said it is a no-brainer. Give crude in naira to local refineries so Nigerians can, at least, enjoy the benefit of being the largest oil-producing country in Africa.”
Asked to justify why the price of fuel is going up when crude oil has fallen to $65 per barrel globally, the CORAN spokesman blamed foreign exchange, logistics, and the effects of middlemen.
“The price will keep rising because of the FX and logistics effects. The cost of logistics, when you add it to the cost of FX, would make the price go up. And of course, because of the money involved when you have to also accommodate the middlemen who sell.
“You know when you want to rent a house, you need the agency fee. If you add the agency fee, the price goes up. That’s what happens. That’s why you can’t get it cheaper. You have the FX effects, and you have the effects of the logistics of shipping in refined petroleum products. And then, you also have the effect of the middlemen. All these will push the cost of petroleum products high in Nigeria,” he added.
Idoko noted that the refiners would not bother to join issues with elements who want to do propaganda or turn the naira-for-crude deal into political issues, saying the success of the policy is affecting a few selfish individuals’ incomes.
“We know why we invested and ventured into the midstream segment. But we know what these elements want. We know what their interest is. We just leave it to Nigerians to judge which is the best. And I think the government also would know what is best for it. One of the most brilliant policies they have implemented was the naira-for-crude. I hope they will sustain it. But if they don’t, I am sure they have better judgement,” he submitted.
The CORAN spokesman regretted that local refiners have to resort to foreign nations to source crude oil.
He added, “Unfortunately, our major refiners have had to resort to other sources so that their investment would not shut down. For that reason, a lot of them have been talking to other producers to get crude so their refineries can run. And it speaks to the fact that a lot of elements, rather than see to the development of this country, are trying to play politics with something as important as energy security.”
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