Nigeria is facing a fresh round of fuel price pressures as international oil markets respond sharply to new U.S. sanctions on Iran with analysts projecting pump prices could climb to N900 per litre in the coming days.
This development comes on the back of rising crude oil benchmarks and significant adjustments at local depots.
On Thursday, Brent crude climbed by $0.97 or 1.37 percent to $72 per barrel, sustaining upward momentum driven by geopolitical risk and reduced global supply.
The U.S. Treasury Department’s latest round of sanctions targeted one individual and several entities, including a Chinese independent oil refiner, for processing Iranian crude — a move that has raised fresh concerns over restricted flows from one of OPEC’s key producers.
Iran currently produces over three million barrels per day, and disruptions to its export capacity tend to ripple quickly across global markets. Analysts at Price Futures Group described the move as a catalyst that “pushed the market back toward recent highs.”
In Nigeria, where petrol imports and local pricing remain tightly linked to global crude movements, the effect has been immediate.
Data obtained from major petroleum loading depots showed prices rising as high as N875 per litre on Thursday — up from earlier average levels of N852–N854 per litre.
Matrix Energy, Zamson, Rainoil, Pinnacle Warri, and Sobaz all raised their depot prices to N875 per litre within hours of the Brent spike, prompting market watchers to warn that retail prices at filling stations could cross the N900 mark if trends persist.
The situation has been further complicated by the temporary suspension of naira-based petroleum product sales by Dangote Petroleum Refinery.
The refinery cited a mismatch between crude oil procurement, which is priced in U.S. dollars, and local sales proceeds received in naira.
“Sales of petroleum products in naira have exceeded the value of naira-denominated crude received. We must temporarily align our sales currency with crude procurement obligations,” the company stated.
While the refinery dismissed online reports suggesting an operational shutdown, it confirmed that sales would resume in naira once NNPC resumes allocation of naira-denominated crude cargoes.
In the interim, the halt has intensified pressure on fuel supply dynamics, particularly for marketers reliant on Dangote’s volumes.
The implications for Nigeria’s already strained inflation outlook are significant. Rising fuel prices are expected to cascade into higher transportation and food costs, compounding household expenditure burdens.
The Central Bank of Nigeria (CBN) has maintained a tight monetary stance in recent months in a bid to rein in inflation, but energy price volatility remains a structural challenge.
U.S. inventory data also supported the bullish trend. Distillate inventories, including diesel and heating oil, fell by 2.8 million barrels, far exceeding expectations.
Simultaneously, heightened geopolitical risks — including renewed hostilities in Gaza, ongoing U.S. airstrikes in Yemen, and trade tensions linked to former President Donald Trump’s foreign policy stance — have contributed to rising global risk premiums.
JP Morgan analysts now project Brent to average $73 per barrel in 2024, with potential short-term movement into the mid-$70s before tapering off later in the year.
With Nigeria heavily reliant on imported petroleum products and grappling with exchange rate volatility, market experts warn that unless crude prices stabilize or government intervenes with supply-side measures, the country could experience prolonged upward pressure on fuel costs.
As of Friday morning, no official update has been issued by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) or the Nigerian National Petroleum Company Limited (NNPCL) regarding fuel pricing thresholds.
Industry stakeholders are now closely monitoring global oil dynamics and local supply responses in anticipation of further adjustments at the pumps.
