Abuja, Nigeria – Rising Petrol Prices: Experts Predict Further Hikes Amid Geopolitical Tensions
Amid the ongoing debate over the deregulation of Premium Motor Spirit (PMS), commonly known as petrol, industry experts have cautioned that prices could surge again soon. The potential hike stems from the continued depreciation of the Naira and the increase in crude oil prices in the international market, driven by escalating tensions in the Middle East.
Dr. Muda Yusuf, an economist and CEO of the Centre for the Promotion of Private Enterprise (CPPE), stated that geopolitical concerns, particularly the looming conflict between Iran and Israel, are likely to push crude prices higher. “These geopolitical tensions raise the possibility of a significant increase in crude oil prices, which will inevitably lead to a corresponding rise in PMS prices in Nigeria,” Yusuf noted.
Mr. Teslim Shitta-Bey, Managing Director of Proshare, echoed these concerns, adding that the ongoing conflict in the Middle East could lead to higher global oil and gas prices, which would in turn impact local petrol prices. “Rising global oil prices, coupled with Nigeria’s fragile exchange rate, may further increase the local cost of PMS,” he said.
The Nigerian National Petroleum Company Limited (NNPCL) recently raised the pump price of PMS by 15%, pushing prices in Abuja to ₦1,030 per litre and ₦998 per litre in Lagos. This marks the second price hike within a month, with petrol prices having risen by over 411% since President Bola Tinubu assumed office in May 2023.
While the Dangote Petroleum Refinery also increased its price by 8.8% to ₦977 per litre, expectations that a crude-for-Naira deal between the Federal Government and the refinery would reduce prices have been dashed, leaving many Nigerians frustrated.
Market Reactions and Potential Impact
Oil markets have been volatile in recent weeks, with Brent crude futures hovering just below $79 per barrel amid speculation of an Israeli attack on Iranian oil infrastructure. Although the attack did not materialize, Yusuf warned that any further depreciation of the Naira or increase in crude prices could push PMS prices even higher.
He cautioned against a full deregulation of PMS, noting the sensitivity of the Nigerian economy and its citizens to fuel price increases. “There are serious social consequences to further price hikes, and we must proceed carefully,” Yusuf added.
Role of Dangote Refinery
While some have looked to the Dangote Refinery for relief, Yusuf explained that the refinery alone cannot significantly lower PMS prices. “Dangote is a business entity, and the government must create favorable conditions, particularly in terms of foreign exchange and crude oil supply, to see any meaningful impact,” he said. He suggested that the government could relax tax measures on critical sectors to ease the pressure on citizens.
Worsening Economic Conditions
Eze Onyekpere, Lead Director of the Centre for Social Justice (CSJ), criticized NNPCL’s latest price increase, describing it as “founded on dubious and mischievous premises.” He highlighted the growing economic hardship in Nigeria, where over 133 million citizens were already living in multidimensional poverty in 2022.
Onyekpere warned that further escalation of the Middle East conflict could drive crude oil prices even higher, exacerbating poverty levels and potentially plunging the country into a recession. He argued that the government’s approach to managing inflation through monetary policy was contradictory, given its simultaneous actions to raise energy costs.
Calls for Government Intervention
Both Yusuf and Onyekpere urged the government to take a more active role in managing the economic fallout from rising PMS prices. Yusuf proposed offering production subsidies to the Dangote Refinery to help lower PMS prices, while Onyekpere called for the savings from subsidy removal—estimated at $7 billion annually—to be reinvested in critical sectors such as education, healthcare, and infrastructure.
Despite these calls for action, the future of petrol pricing in Nigeria remains uncertain as global events continue to impact the local economy.