Fuel Scarcity Fallout: Petrol At ₦1,200/Litre, Naira To Drop To ₦1,550/$

Fuel Scarcity Fallout: Petrol At ₦1,200/Litre, Naira To Drop To ₦1,550/$

Economist and CEO of Financial Derivatives Company Limited, Mr. Bismarck Rewane, has projected that petrol prices in Nigeria could soar to ₦1,200 per litre in the near future. In his November 2024 economic outlook, Rewane also predicted that Brent crude could trade at $70 per barrel by December,……CONTINUE READING 

with inflation potentially reaching 34%. He also forecasted the Naira might weaken further to ₦1,550/$ by January 2025.

Speaking at the November edition of the Lagos Business School’s Breakfast Session titled ‘Democracy on Trial! Trump – Going Back to the Future,’ Rewane emphasized that the Naira’s current exchange rate does not reflect its fair value and is expected to gradually recover. According to him, global oil prices and logistical costs will have a significant impact on the pricing of petrol.

Rewane explained that while the Dangote Refinery is expected to boost Nigeria’s oil supply, it won’t necessarily stabilize fuel prices due to the refinery’s pricing model, which is influenced by global crude prices and operational costs. He also mentioned that smuggling would persist as long as Nigeria’s petrol prices remain lower than those of neighboring countries.

Additionally, the recent increase in petrol prices to ₦1,030 per litre has already led to a 25% drop in vehicular movement, according to a count conducted on a major road in Lagos.

Rewane also pointed out that the Naira is currently undervalued by about 35.18%, with its fair value estimated at ₦1,090.24 to the Dollar. He projected that with the right reforms, the Naira could begin to recover by early 2025, which would help reduce inflation and stabilize the economy.

Finally, Rewane highlighted that the current economic challenges have led to significant foreign exchange losses for Nigerian companies, totaling N2 trillion for the country’s top 10 firms, impacting their earnings and operational costs.