Another petrol price hike could be looming in Nigeria after international crude oil prices surged above $117 per barrel on Friday, amid escalating tensions in the Middle East and renewed fears of military strikes on Iran.
Brent crude, the global benchmark, rose to an intraday high of $117.45 per barrel on October 23, its highest level in nearly six months, before settling at $116.72. US West Texas Intermediate crude closed at $103.27 per barrel.
The rally comes as the Dangote Petroleum Refinery’s petrol gantry price remains at N1,350 per litre following an increase from N1,265 on September 12.
Although no new petrol price increase has been announced, sustained increases in international crude prices could raise the cost of crude procurement, refined products and replacement supplies, potentially putting further pressure on domestic prices.
Middle East tensions drive oil prices higher
Oil prices rose on Friday as attacks by Houthi militants in Saudi Arabia heightened concerns about further disruptions to energy supplies.
Brent futures gained $3.55, or 3.14 per cent, to settle at $116.72 per barrel, while US crude rose $3.80, or 3.8 per cent, to $103.27. Brent recorded a weekly gain of about six per cent, marking its third consecutive week of increases.
The rally was also driven by concerns that the United States could resume military strikes against Iran after its November 3 midterm elections.
Iran has warned that a new US-Israeli offensive could prompt attacks on oil facilities and other infrastructure across the Gulf region, adding to concerns about the security of global energy supplies.
The regional security situation has also raised concerns about shipping through the Strait of Hormuz, a strategic waterway used to transport substantial volumes of global oil supplies.
Any prolonged disruption to production, exports or shipping could tighten available supplies and increase transportation, insurance and fuel costs.
Dangote refinery’s petrol price remains N1,350
In Nigeria, Dangote Petroleum Refinery increased its petrol gantry price from N1,265 to N1,350 per litre with effect from September 12.
The N85 adjustment represented a 6.7 per cent increase and was the refinery’s fourth upward price revision since August 21.
The gantry price is the rate at which the refinery sells petrol to customers at its loading facility. Retail prices at filling stations can differ because of transportation, distribution expenses, operating costs and marketers’ pricing decisions.
Higher crude prices do not automatically translate into an immediate or uniform increase in petrol prices. The effect depends on procurement arrangements, refining costs, product availability, exchange rates, logistics and prevailing market conditions.
Nevertheless, a prolonged rally in crude prices could raise the cost of securing replacement supplies for refiners, importers and fuel marketers.
Nigeria exposed to global oil market volatility
The latest rally presents a potential challenge for Nigerian households and businesses already facing high transport and operating costs.
If wholesale petrol prices rise, transport operators may face higher running expenses, potentially putting further pressure on fares and the cost of moving goods.
However, the effect on domestic petrol prices will depend on how long international crude prices remain elevated and how refiners and marketers respond.
For now, the central development is the sharp increase in global oil prices rather than a confirmed new petrol price adjustment in Nigeria.
