Marketers anticipate petrol price crash as crude drops
Marketers of petroleum products have expressed anticipation of a possible crash in the prices of Premium Motor Spirit (petrol) following the drop in crude oil prices.
The Petroleum Products Retail Outlet Owners Association of Nigeria said there could be a new price regime from today (Monday) based on the reduction in the cost of crude oil.
The PUNCH reports that the Dangote Petroleum Refinery, the Nigerian National Petroleum Company Limited and other fuel marketers have kept petrol prices above N900 per litre despite the decline in the price of crude oil.
It was observed over the weekend that petrol price remained at the range it was raised to when crude prices rose close to $80/barrel recently, when the conflict between Israel and Iran escalated.
Dangote, NNPC and other major fuel distributors in Nigeria hiked petrol prices less than two weeks ago, blaming this on the rise in crude oil prices on the international market. The pump prices of petrol hovered between N915 and N955 at the pumps, depending on the location. It was below N900 before the sudden hike.
There were reports that the product was sold at N960 and N980 in the far north because of the distance. However, as crude prices fell below $70 within the past few days, the pump prices of PMS maintained their latest position.
It was noted that crude oil prices ended the week lower than they started it because Israel and Iran stopped bombing each other, alleviating fears of a supply disruption in the Middle East.
Brent crude was traded around $67 per barrel, with West Texas Intermediate at $65 per barrel as of Sunday. They both dipped to as low as $65 and $63 on Saturday. That’s down from over $77 for Brent crude and $73 per barrel for WTI at the end of the week before the last one, according to a report by Oilprice.com.
Despite this drop in crude rates, fuel producers and importers in Nigeria did not reduce their prices to reflect the changes. Speaking with our correspondent, PETROAN’s National Publicity Secretary, Joseph Obele, stated that a new price regime was expected.
According to him, the Dangote refinery, NNPC and depot owners could lower their prices this week. “We anticipate there will be a new price regime from tomorrow. The new prices will come from everyone; from Dangote, NNPC and the rest. Let us wait till tomorrow, but there will be a new price regime,” Obele told The PUNCH on Sunday.
Old stock factor
In an interview, the spokesman of the Crude Oil Refinery Owners Association of Nigeria, Eche Idoko, said some marketers still had old stocks to sell. According to Idoko, the price would start to reduce within a week of crude stability.
“Well, it’s not rocket science. The price of crude oil moved up immediately but people were getting stocks, and until the stocks go down, the price cannot change. Let’s give it like a week or two, and we’ll see the price drop,” he said.
Aside from this, Idoko added that there was a whole lot wrong with petrol pricing in Nigeria. He also blamed crude shortage for high petrol pricing. “The pricing mechanisms in Nigeria have not made us fully enjoy what we should as a result of the fall in the price of petroleum products.
“Again, remember that we have mentioned that the local refineries are sourcing crude from outside the country. Dangote is buying from the United States. So, whatever we would have gained in refining in-country, we lose it to crude importation.
So, until that imbalance is corrected, we will not be able to maximise the benefits that come from refining locally, which is what we have been saying. We need to stop importing crude. We need to begin to utilise the crude in-country. Having said that, I think major price adjustments are not immediate. It takes a while because we have old stocks,” Idoko submitted.
Recall that during the 12-day war that started after Israel struck Iran’s nuclear facilities on June 13, Brent prices rose to around $80/barrel before slumping to $67 after United States President Donald Trump announced an Iran-Israel ceasefire.
On Sunday, our correspondent observed that filling stations in Abeokuta, the Ogun State capital, sold petrol at N935 per litre. These are retailers selling Dangote refinery’s products like MRS Oil.
Along the Mowe/Ibafo axis of the Lagos-Ibadan Expressway, some filling stations like SGR, Akiavic, Sedabuk and others offered prices lower than that of Dangote’s partners, spelling petrol between N915 and N925. The NNPC retail outlet in Ibafo sold petrol at N925 on Sunday.
Recall that on June 21, MRS raised the pump price of premium motor spirit to N925 in Lagos, from N885. The change in MRS petrol price came after the Dangote refinery raised the ex-depot price of the product from N825 to N880 the day before.
Since then, MRS started selling petrol at the rate of N955 in the South-East while selling it at N935 In Ogun, Oyo, Ondo, Osun and Ekiti. Also, MRS customers in the North East were buying petrol at the rate of N955 while those in the North West paid N945 for the product.
The PUNCH reports that importers had earlier increased their prices following the same rise in crude prices.
Our correspondent observed that some of the depot owners and importers adjusted their prices to compete with the Dangote refinery, whose ex-depot price remained N880 as of Sunday.
According to Petroleumprice.ng, Rainoil dropped its price from N900 to N880; A.A.Rano’s price was N877; NIPCO lowered its price from NN895 to N870, same price as Aiteo on Sunday.
Meanwhile, marketers last week urged the Federal Government to implement urgent measures to prevent petrol and diesel prices from becoming unaffordable for Nigerians. With crude prices fluctuating, analysts warn that Nigerians may face unaffordable pump prices unless proactive steps are taken.
As a result, marketers called on the administration of President Bola Tinubu to introduce mechanisms that would ensure the affordability of fuel, especially for low-income earners.
They recommended that the Presidential Committee on the naira-for-crude initiative should peg the price of crude oil allocated to domestic refineries at levels that enable cost-effective production.
According to stakeholders, making crude available at discounted rates to local refiners could ease the burden on citizens and reduce the risk of inflationary pressures triggered by rising fuel costs.
Speaking in an interview with our correspondent, the National Vice President of the Independent Petroleum Marketers Association of Nigeria, Hammed Fashola, said fuel could have gone higher above N1,000 per litre if the war in Iran had continued to escalate, especially as the United States bombed Iran’s three nuclear sites on Saturday.
According to Fashola, the Federal Government needed to make more crude available to the 650,000-capacity Dangote refinery to ease the burden on the masses.
The IPMAN VP maintained that the crude oil set aside for local consumption should be sold to local refineries at an agreed rate by all parties, and the product should be sold locally at a reduced price, not minding the international rates.
