Oil marketers suggest that the cost of petrol could experience yet another increase, marking the third rise in a span of 10 weeks. The landing cost of petrol has surged by 37.4% MoM, reaching N632.17 per litre in July 2023 from N460 per litre in June 2023. This surge in costs, excluding additional charges, could potentially result in prices reaching nearly N700 per litre at filling stations.
Industry sources reveal that the situation might escalate, as the factors contributing to the July increase have intensified. Persistent foreign exchange scarcity, deteriorating exchange rates, and the recent uptick in international crude oil prices are driving these concerns. The Naira’s depreciation of approximately 6.5% in the official market and 25% in the parallel market since the last price hike exacerbates the situation.
Oil marketers caution that August’s landing cost is expected to continue rising due to these ongoing challenges. With Nigeria’s crude oil output declining, there are worries about the capacity to import refined products. In its August 2023 Monthly Oil Market Report, OPEC highlights Nigeria’s oil production drop of 6.5% YoY and 3.0% MoM.
The National Operations Controller of IPMAN, Mike Osatuyi, acknowledges the benefits of higher crude oil prices for the government’s revenue but foresees potential price increases for consumers, given the deregulated market. A market expert suggests that market volatility is discouraging importation and investment in the deregulated sector.
Argus, a UK-based market intelligence firm, indicates that the situation could worsen, increasing pressure on local and international dealers to adjust prices. European oil traders may look to cover gasoline supply, although volumes could shift to other parts of West Africa. The Business Development Manager of Argus West Africa, Funmi Bashorun, emphasizes the importance of transparent pricing terms for gasoline supply.