Oil prices declined by 2% on Wednesday as weak Chinese data and a stronger United States dollar dragged on commodity prices.

Brent crude oil, against which Nigerian oil is priced, dipped by $1.75, or 2.37%, to $71.96 a barrel at 3:46 pm while U.S. West Texas Intermediate crude (WTI) shed $1.90, or 2.74%, to $67.56.

The decline in prices was caused by weak Chinese manufacturing activity. The data released by the Chinese government showed that activity in the sector contracted faster than expected in May with the official manufacturing purchasing managers’ index declining from 49.2 posted in April to 48.8 in May, below the 49.4 predicted by economists.

Also, the strong U.S. dollar is another factor impacting the purchase of crude oil as buyers holding foreign currencies found it too expensive.

The U.S. dollar index, which measures the greenback against six major peers, saw support from cooling European inflation and progress on the U.S. debt ceiling standoff, which will advance to the House of Representatives for debate on Wednesday.

Market players are preparing for the upcoming June 4 meeting of OPEC+ – the Organization of the Petroleum Exporting Countries and allies including Russia.

Mixed signals by major OPEC+ producers on whether or not the group will decide to further cut oil production have sparked recent volatility in oil prices.

Despite the latest pullback in prices, HSBC and analysts do not expect OPEC+ to announce further cuts in the upcoming meeting.

HSBC said on Wednesday that stronger oil demand from China and the West from the summer onwards will bring about a supply deficit in the second half of the year.

The Nigerian National Petroleum Corporation Limited (NNPCL) on Wednesday confirmed it has indeed increased the price of petrol across the country.

This was made known in a statement signed by Garba Deen Muhammad, the Chief Corporate Communications Officer of NNPC Ltd, and made available to the public.

The statement reads “NNPC Limited wishes to inform our esteemed customers that we have adjusted our pump prices of PMS across our retail outlets, in line with current market realities.

“As we strive to provide you with the quality service for which we are known, it is pertinent to note that prices will continue to fluctuate to reflect market dynamics.

“We assure you that NNPC Limited is committed to ensuring a ceaseless supply of products.

“The company sincerely regrets any inconvenience this development may have caused. We greatly appreciate your continued patronage, support, and understanding during this time of change and growth.”

Price of petrol jumped up across the country immediately after President Bola Ahmed Tinubu declared that the fuel subsidy is gone on Monday during his inauguration.

Checks by Investors King show that in some parts of the country, prices rose as high as 500% before NNPCL reportedly released the widely circulated list below to curtail marketers’ excesses.

Price was cheapest in Lagos at N488 a litre because of its close proximity to the port while it was highest in the northern states with Maiduguri and Damaturu recording the highest at N557 a litre. See the list below

NNPCL outlets across the country have been directed to implement the new price, starting from May 31, 2023.

“DEAR ALL. Following Management approval of the Upward review of NNPC PMS pump price as in below table for Mega/Standard/Leased Stations, Please find below schedules for the RMSs and Wayne to handle. Please implement meter change as approved effective today 31st May 2023. Wayne is to attend to all locations as relates to their area of coverage in our network,” a statement read.

Mele Kyari, the group chief executive officer (GCEO) of the Nigerian National Petroleum Company (NNPC) Limited, has revealed that the federal government still owes the firm a staggering sum of N2.8 trillion, which was spent on petrol subsidy.

During a press briefing following a meeting with President Bola Tinubu in Abuja on Tuesday, Kyari emphasized that the subsidy payment has become unsustainable, hindering the company from adequately funding its core operations.

He stated, “Today, we are waiting for them to settle up to N2.8 trillion of NNPC’s cash flow from the subsidy regime, and we can’t continue to build this.”

Kyari further explained that despite the provision of “N6 trillion in 2022, and N3.7 trillion in 2023,” the NNPC has not received any payment from the federation. The NNPC had been using its cash flow to cover the petrol subsidy payments, but the government has been unable to reimburse the N2.8 trillion that has already been spent.

He elaborated, “That means they (the federal government) are unable to pay, and we have continued to support this subsidy from the cash flow of the NNPC. When we deduct our fiscal obligations of taxes and royalties, there is still a balance that we are funding from our cash flow. And that has become very difficult and it is affecting our other operations.”

Kyari expressed concern that the inability to retain cash for investment in their core businesses poses significant challenges for the company.

He stressed that the government must compensate and repay the NNPC for the money spent on the subsidy.

He stated, “So, today the country does not have the money to pay for the subsidy. There is an incremental value that will come from it. But it is not an issue of whether you can do it or not because today we cannot afford it, and they are not able to pay our bill. That comes to how much the federation owes the NNPC now. Today, we are waiting for them to settle up to N2.8 trillion of NNPC’s cash flow from the subsidy regime, and we cannot continue to build this.”

It was reported by Investors King that subsidy payments reached N3.3 trillion in the previous year, spanning 11 months. The immediate past federal government had budgeted N3.35 trillion for energy subsidy in the first half of the year, assuring that under-recovery payments would cease.

On April 5, the federal government announced it had secured $800 million loan from the World Bank as part of its post-subsidy palliative plans.

Regarding the recent petrol queues across the country, Kyari emphasized that the confusion arose from the president’s statement that “subsidy is gone.”

Marketers and consumers were seeking clarity on the matter, which caused a rush for petrol and subsequently led to queues.

Kyari assured Nigerians that the government would implement measures to mitigate the impact of subsidy removal starting in June.