Another fuel price increase as crude reaches $94 – Marketers

According to oil marketers, the price of Premium Motor Spirit, also known as petrol, could increase at the pump due to the rising cost of crude oil and the naira’s depreciation versus the US dollar.

Additionally, it was learned that the Federal Government had gradually increased the amount secretly spent as a petrol subsidy as a result of the dramatic increase in crude oil prices to roughly $94 per barrel and the FX crisis.

Over 80% of the price of PMS was determined by the price of crude oil and the dollar’s value at the time, according to downstream oil dealers.

The price of Brent crude, the world’s standard for oil, increased to $94 a barrel on Sunday, the highest level since 2023. Oil started the year at around $82/barrel, fell below $70/barrel in June, but has recently traded above $92/barrel.

On Thursday that as foreign exchange shortages increased, the value of the naira fell to N950 to the dollar.

According to the report, the naira lost more ground versus the dollar on Wednesday after ending at 950/$ on the parallel market.

The naira, which had previously closed at 930/$ at the close of business on Tuesday, was purchased and exchanged at 935/$ and 950/$ on Wednesday, Bureau de Change operators had previously told OBASANJONEWS24.

Operators argued on Sunday that the government was administering a quasi-subsidy even though the Federal Government and the Nigerian National Petroleum Company Limited had insisted that the subsidy on fuel had stopped as a result of the liberalisation of the downstream oil sector.

They emphasised that if the government insists on keeping the commodity at N617/litre, then subsidy on PMS has been quietly returned. They noted that with the most recent increase in crude oil price, the cost of petrol was expected to climb.

The marketers said that in July, when the price of fuel was increased to N617 a litre, crude oil traded at about $82 per barrel, while the parallel market exchange rate was just N950.

The Nigerian Association of Road Transport Owners echoed the worries of marketers, stating that it had been difficult for them to comply with NARTO’s demands over raising the cost of transportation for petrol due to the price cap on petrol.

“The Group Chief Executive Officer of NNPC had noted that Nigerians should not anticipate petroleum product prices to be pegged as long as the dollar continues to grow in one of his utterances. Because PMS is made from crude, the price of crude oil is also rising, which has an effect on the price of petrol.

Therefore, under this regime of price deregulation, the price of importing petroleum goods will automatically rise as soon as the value of the dollar rises. The National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, predicted that the cost of every other associated service will also increase.

Therefore, the fuel we are purchasing today at N617 or N596 depending on where you buy it and how close the depots are, is actually cheaper than it should be given the growth in the value of the dollar and the price of crude oil, he continued.