The price of Premium Motor Spirit (PMS), commonly known as petrol, could continue to decline if the downward trend in crude oil prices persists. This comes as the naira maintains stability against the dollar in the foreign exchange market.
Global oil prices have recently fallen to their lowest levels in 12 weeks. Brent crude dropped by $1.19 (1.6%) to settle at $71.62 per barrel, while the US West Texas Intermediate (WTI) fell by $1.39 (2%) to close at $68.37 per barrel. Reports indicate that these are the lowest closing prices for Brent since December 6 and WTI since December 9.
The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, have decided to proceed with a planned increase in oil output in April. This move is expected to keep crude prices low, which could translate into cheaper petrol prices in Nigeria.
Industry experts in Nigeria’s downstream oil sector have noted that the cost of refined petroleum products is mainly influenced by crude oil prices and the exchange rate.
Last week, the Dangote refinery reduced its ex-depot petrol price from N890 per litre to N825. Following this, the Nigerian National Petroleum Company Limited (NNPC) adjusted its own price to match Dangote’s, leading to what many have described as a price war.
Economist Paul Alaje has noted that the recent price reduction is sustainable, suggesting that petrol prices could go as low as N700 per litre based on the current market conditions. However, he warned that any rise in crude oil prices due to a global crisis could affect this trend.
“It is sustainable to reduce petrol prices to N700 based on today’s reality of the exchange rate. The challenge we may have is a global crisis that makes the price of crude oil go up. If that happens, we are going to see the difference. But for now, we are seeing relative stability,” Alaje said on Channels Television.
He also noted that, based on calculations, petrol should currently be priced between N795 and N820 per litre.
Meanwhile, Billy Gillis-Harry, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria, has stated that petrol prices will continue to fluctuate depending on international crude oil prices and foreign exchange rates.
While the current price reductions may offer relief to consumers, the Federal Government had projected crude oil prices at $74 per barrel in its 2025 budget, meaning that the lower-than-expected prices could impact revenue expectations.
