Crude Oil Price Decline: Refiners Predict Petrol Could Fall Below N400 Per Litre

Crude Oil Price Decline: Refiners Predict Petrol Could Fall Below N400 Per Litre

The Crude Oil Refinery Owners Association of Nigeria (CORAN) has announced that the price of Premium Motor Spirit (petrol) could potentially drop below N400 per litre due to the recent decline in crude oil prices.

CORAN suggested that if crude oil prices were to decrease to $50 per barrel, petrol could realistically be priced at around N350 per litre. However, they also cautioned that petrol prices may continue to rise despite lower crude costs and a decline in landing expenses.

The association expressed concern that without the continuation of the naira-for-crude deal by the Federal Government, petrol prices may increase even if the price of crude oil falls to $50 per barrel.

According to IREPORTERONLINE, oil prices fell to $65 per barrel last week, as new U.S. import tariffs and an unexpected rise in OPEC+ supply reduced global benchmarks by $10 per barrel.

Oil prices were previously buoyed by U.S. tariffs threatened by President Donald Trump against countries purchasing crude from Venezuela, but the market shifted dramatically last Friday when Brent crude dipped to $65 for the first time since 2021.

Oilprice.com indicated that the combination of tariffs, OPEC+ decisions to accelerate the reduction of production cuts, and retaliatory measures from China contributed to the $10 drop in oil prices, with ICE Brent crude falling below $65 for the first time since August 2021.

In a related report, West Texas Intermediate (WTI) crude futures fell by $4.96, or 7.4%, to settle at $61.99. China’s announcement to impose additional tariffs of 34% on all U.S. goods from April 10 has further escalated trade tensions.

Following these market developments, the Major Energies Marketers Association of Nigeria reported that the landing cost of petrol decreased from N885 to N865 as of Saturday. Despite this reduction, the ex-depot price of petrol in Lagos increased from N860 to N900 per litre, highlighting the Nigerian market’s failure to respond to market dynamics positively.

Eche Idoko, the Publicity Secretary of CORAN, expressed concern over the disconnection between falling international crude prices and rising domestic fuel costs, attributing this situation to foreign exchange pressures. He stated that the naira-for-crude policy aims to ensure energy security and stabilize the naira’s value.

Idoko criticized certain individuals for continuing to import substandard petroleum products and for resisting local refining initiatives. He emphasized that some middlemen oppose the naira-for-crude deal to maintain their profits, as local refining could reduce petrol prices significantly.

He stated, “These middlemen, who act merely as agents, have no investment in the business and profit from connecting Nigerian consumers with international traders, leaving the local market without the benefits of reduced prices.”

Idoko further argued that as crude prices continue to drop, the price of refined fuel in Nigeria should follow suit, but instead, it is rising due to foreign exchange rates, logistical challenges, and the involvement of middlemen. He called for support of local refining efforts to capitalize on Nigeria’s status as Africa’s largest oil producer.

Idoko elaborated on the effects of foreign exchange and logistics on rising petrol prices, indicating that these costs, compounded by middlemen’s fees, lead to higher prices at the pump.

He affirmed the commitment of local refiners to support energy security and urged the government to continue the naira-for-crude policy, which has demonstrated potential to stabilize petrol prices and foster local refining initiatives.

Despite the challenges, CORAN remains hopeful that the naira-for-crude deal, initiated in October between the Nigerian National Petroleum Company Limited and the Dangote refinery, will help manage fuel prices. However, recent performance indicated that the amount of crude delivered fell short of the agreed targets, underscoring ongoing challenges in achieving energy security.