The Crude Oil Refinery Owners Association of Nigeria has stated that the price of Premium Motor Spirit (petrol) could fall below N400 per litre if the ongoing decline in crude oil prices continues.
CORAN argued that there is no reason why petrol should not be sold at N350 per litre if crude oil prices eventually drop to $50 per barrel.
However, CORAN warned that petrol prices are likely to keep rising despite the drop in crude prices and the reduction in landing costs.
The association expressed concern that unless the Federal Government continues the naira-for-crude deal, petrol prices will keep increasing, even if crude oil prices fall to $50 per barrel.
The PUNCH reported that oil prices saw a significant decline last week, with Brent crude dropping to $65 per barrel, a level not seen since 2021.
This was due to a combination of U.S. import tariffs on crude from Venezuela, an unexpected supply hike by OPEC+, and escalating trade tensions between the U.S. and China, which together pushed global oil prices down by $10 per barrel.
The impact of these factors also led to a drop in the price of U.S. West Texas Intermediate crude to $61.99.
Meanwhile, the Major Energies Marketers Association of Nigeria disclosed that the landing cost of petrol had decreased from N885 the previous week to N865 as of Saturday.
Despite this reduction, the ex-depot price of petrol in Lagos rose from N860 to N900 per litre, highlighting the failure of the Nigerian market to respond to market forces in a way that would benefit consumers.
In an interview, CORAN’s Publicity Secretary, Eche Idoko, expressed concern that while crude prices were falling globally, the price of refined fuel in Nigeria was rising.
He said the naira-for-crude policy was essential to ensure energy security for the country and stabilize the naira.
Idoko added that the policy had been successful in stabilizing fuel prices before, and some individuals were trying to undermine it for personal gain.
Idoko said, “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 N700 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 N350. 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 N350.”
He further criticized those who opposed the local refining efforts, emphasizing that some people were more focused on importing substandard petroleum products into the country rather than developing local refining capacity.
Idoko pointed out that the policy was benefiting the country, and the government should continue to support it, saying, “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.”
He also explained the reasons behind the rising fuel prices, blaming foreign exchange fluctuations, logistical costs, and the influence 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.”
Idoko noted that, despite the decline in crude oil prices, local refiners had to look for alternative sources of crude oil from other countries to keep their refineries operational. He stated, “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.”
He expressed frustration with individuals who were hindering the development of Nigeria’s energy security for personal and political reasons.
“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.”
The naira-for-crude policy was initially launched in October by the Nigerian National Petroleum Company Limited in collaboration with Dangote Refinery to reduce fuel prices in Nigeria.
However, by March, the amount of crude delivered under the deal fell short of expectations, leading to concerns that the policy may not be renewed. As a result, fuel prices have risen, with the cost of a litre of petrol now ranging from N920 to N970, depending on the location.
