Fuel Prices Set to increase Nationwide; Reason Emerges

Energy experts and downstream operators have warned that Nigeria may witness a fresh increase in petrol and diesel prices if global crude oil prices surge above $90 per barrel amid escalating tensions between the United States and Iran, as reported by The PUNCH.

The warning comes as hostilities in the Middle East triggered fresh volatility in the global oil market, raising concerns over the vulnerability of Nigeria’s domestic fuel pricing structure despite the country’s push for local refining.

Recent checks across major cities indicate that petrol currently sells between N824 and N880 per litre, depending on location, logistics costs, and the marketer involved, following the latest price adjustment by the Dangote Petroleum Refinery. The development comes after the refinery reduced its Premium Motor Spirit (petrol) gantry price by N25 per litre, lowering the ex-depot rate from N799 to N774 per litre in February 2026.

Five energy experts, in separate interviews with our correspondent on Sunday, said the recent US–Iran conflict could have far-reaching effects on global crude oil prices, warning that any sustained escalation of hostilities, particularly around the strategic Strait of Hormuz, is already feeding risk premiums into the market.

They all agreed that the development could translate into higher fuel costs for consumers if the crisis deepens. Already, global crude oil prices rose by about 10 per cent over the weekend after several oil majors reportedly halted tanker movements near the Strait of Hormuz, one of the world’s most critical energy transit routes, amid escalating hostilities in the Middle East.

The waterway links the Persian Gulf to the Indian Ocean and handles a significant portion of global oil shipments. Any disruption to the route is widely seen as capable of triggering supply shocks and price spikes.

As of 10 pm Sunday, Brent crude traded at $72.87 per barrel, while West Texas Intermediate stood at $67.02. Nigeria’s Bonny Light crude was priced at $78.62 per barrel. Analysts warned the situation could deteriorate if the crisis escalates, pushing prices closer to the $90 benchmark.

Chief Executive Officer of Dairy Hills, Kelvin Emmanuel, said Nigeria’s exposure to global crude pricing remains high because the Dangote Refinery still imports a significant portion of its feedstock.

He stated, “Dangote currently processes an average of 18 million barrels of crude oil monthly. Out of this, about 12 million barrels are imported, while he gets about 5.7 million barrels, which is the equivalent of six cargoes, from the Nigerian National Petroleum Company Limited.

“The commercial operators are not keen on supplying him feedstock because they hide under the guise of willing buyer, willing seller to inflate third-party commissions to the domestic refiner, in contravention of Section 109 of the Petroleum Industry Act.

“Any sharp increase in crude oil prices from this escalation will lead to a revision in the cracking margin spread of the refiner and, consequently, the price of refined products. The fact that protection and indemnity clubs are raising war risk insurance premiums on tanker vessels will also make it more expensive to land feedstock in Nigeria. If crude prices rise above $90 per barrel, the refiner will have to revise the price of PMS and diesel in Nigeria.”

He also questioned the transparency of the government’s naira-for-crude arrangement, saying, “The government claims that it supplies him nearly 190,000 barrels under the naira-based crude swap but is unable to account for the volume of cargoes given under said arrangement, or specify the equivalent petrol and diesel output.”

Similarly, the Chief Executive Officer of Petroleumprice.ng, Olatide Jeremiah, said Nigeria’s continued reliance on imported crude and refined products leaves the country vulnerable to international market shocks.

He said, “Nigeria is the largest crude oil producer in Africa and at the same time hosts the biggest refinery on the continent and the seventh largest globally. Ideally, a hike in global crude prices should not have a direct impact on local fuel prices.

“The Petroleum Industry Act clearly prioritises domestic refineries in crude allocation. If Dangote sourced 100 per cent of its crude locally, global price volatility would have little or no impact on domestic fuel prices because transactions would be naira-denominated.

“However, more than 60 per cent of Dangote refinery’s crude feedstock is being sourced abroad, and 40 per cent of refined products being consumed are imported. Fuel prices will be at the mercy of oil prices. Petroleum traders in Nigeria have been tracking events between Iran and the US, and a surge in oil prices is expected. For Nigeria, revenue will increase, but Nigerians should brace for higher fuel prices on Monday, no doubt.”

Jeremiah added that the geopolitical tension should serve as a wake-up call for authorities to boost crude production and address oil theft and under-supply to domestic refineries.

“Also, the crises affecting the strategic Strait of Hormuz, through which tankers pass to Africa, won’t directly affect the supply of crude to Nigeria, depending on the markets we serve, like North America, Asia, and Europe.

“This is a wake-up call to the federal government that Nigeria’s growing and functional refineries cannot continue to rely on foreign crude. With current production at 1.5 million barrels per day, just 50 per cent of our potential, Nigeria should produce at least 2.5 million barrels per day if not for theft, corruption, and sabotage.

“This international oil price shock is an eye-opener. Every little oil price fluctuation, upward or downward, affects prices, profitability, and investor confidence. Production must be enhanced to ensure refineries like Dangote survive. The Petroleum Industry Act encourages domestic refineries to be prioritised for sufficient feedstock. The naira-for-crude arrangement only provides 30 per cent to Dangote, which is insufficient for a refinery of this scale,” he concluded.

An energy law expert at the University of Lagos, Dayo Ayoade, said the global oil market operates on a demand-supply model, and Nigeria can no longer shield consumers from international price volatility following the removal of fuel subsidies.

He said, “The instability in the Middle East and any threat to the Strait of Hormuz will drive oil prices higher based on both perception and real supply concerns.

“Now the local fuel market has transitioned to a more commercial model, which is affected by international developments. Without subsidies, any crude price increase will directly impact fuel prices at the pump. More revenue may come in, but we must remain cautious.”

Professor Emeritus Wumi Iledare, a petroleum economist, cautioned against panic, noting that the global oil market is more diversified and responsive than during past geopolitical crises.

He said, “We must resist the temptation to interpret the US–Iran strike as the beginning of another historic oil shock. This is not the 1973 oil embargo, nor the Iran–Iraq war, nor the Gulf War era. The global oil market today is structurally more diversified, transparent, and responsive. Prices reacted sharply in the past because supply options were limited and information was slower.”

Iledare added that oil prices are determined by global market forces rather than by OPEC alone, noting that geopolitical tensions may introduce only a temporary risk premium that fades when fundamentals remain stable.

National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, said marketers were monitoring the situation and would respond based on market developments.

He said, “Anything that affects the international oil market will affect local supply and prices. We are watching the trend and the reactions of the refinery and the government. We assure Nigerians that marketers will continue to ensure a steady supply once products are available.”

The PUNCH reports that the crisis escalated after coordinated military strikes on Iran by the United States and Israel, prompting retaliatory attacks across the region and raising fears of a wider conflict. Saudi Arabia has vowed to respond to any aggression, further heightening tensions.

President Donald Trump announced on Truth Social that Iran’s supreme leader, Ayatollah Ali Khamenei, was killed Saturday after US and Israeli predawn assaults. Iranian state media later confirmed his death.

The situation highlights Nigeria’s continued exposure to global oil shocks despite ongoing reforms and investments in local refining. Experts stressed that improving crude production, curbing theft, and ensuring adequate domestic supply to refineries remain critical to achieving energy security and insulating the economy from future price volatility.

Brent crude jumped 10 per cent to about $80 per barrel over the counter on Sunday, while analysts predicted that prices could climb as high as $100 after US and Israeli strikes on Iran.

The Strait of Hormuz, a narrow but strategic corridor linking the Persian Gulf to the Indian Ocean, handles a significant portion of global oil shipments. More than 20 per cent of global oil is moved through the Strait. Any threat to the route typically pushes oil prices higher due to supply risks and rising shipping costs.

The suspension of cargo movements followed heightened military activity in the region, including missile exchanges and naval alerts, which raised fears among shipowners and insurers. War risk premiums on vessels operating in the region were also increased, making crude transportation more expensive.

Meanwhile, key members of the OPEC+ oil cartel announced a greater-than-expected increase to production quotas on Sunday following US and Israeli strikes on Iran. The eight-member V8 group, including Saudi Arabia, Russia, Kuwait, Oman, Iraq, and the UAE, agreed to a “production adjustment” of 206,000 barrels per day (bpd), effective in April.

Analysts, however, warned that the increase may be insufficient to prevent a spike in oil prices if tensions persist. Jorge Leon, an analyst at Rystad Energy, noted that Iran could target the Strait of Hormuz, which carries nearly a quarter of the world’s seaborne oil supplies.

Leon said, “If oil cannot move through Hormuz, an extra 206,000 barrels per day does very little to ease the market. Prices will respond to Gulf developments and shipping flows, not a relatively small increase in output.” Algeria and Kazakhstan are also part of the V8 group.

Source: PUNCH