Brent crude price drops to $93, but petrol prices remain high in Nigeria

The price of Brent crude oil has declined to $93 per barrel, following renewed diplomatic efforts to end the U.S.-Iran conflict and reopen the Strait of Hormuz. This development has strengthened expectations of a possible agreement, leading to a 4% drop in crude oil prices. The renewed optimism came after reports that Qatar's Prime Minister was heading to the White House with an Iranian proposal for an interim agreement aimed at restoring commercial shipping through the Strait of Hormuz.

In Nigeria, the estimated landing cost of imported petrol in Lagos has fallen to nearly N1,072 per litre, following the sharp decline in crude prices. However, a survey of filling stations showed that while some independent marketers have adjusted their pump prices downward, others, including major operators, have retained their previous rates. This has left consumers with little relief from the high cost of petrol. Some filling stations, such as AA Rano, Aliko, and AY Maikifi, reduced their pump prices from N1,430 to N1,420 per litre, representing a N10 reduction.

In Maiduguri, Borno State, petrol prices remained between N1,440 and N1,450 per litre, indicating that the decline in crude oil prices has yet to translate into significant reductions in the retail market. Although AY Shafa adjusted its price downward from N1,450 to N1,440 per litre, some other filling stations continued to sell petrol between N1,450 and N1,470 per litre. The situation suggests that motorists in the North-East are still paying relatively high prices despite the recent movement in the international crude oil market.

A different trend was observed in Abuja, where pump prices declined to between N1,390 and N1,410 per litre. Findings showed that AA Rano, AY Maikifi, and Shema were selling petrol at N1,410 per litre, while Bovas and AP offered the product at N1,390 per litre. The N20 difference between the prices charged by the two groups of marketers reflects varying pricing decisions among operators in the Federal Capital Territory.

The Nigerian National Petroleum Company Limited (NNPC) and Optima retained their prices at N1,385 per litre, with no further adjustment recorded. According to Akinrinade Akinade, a former Chairman of the Independent Marketers' Association of Nigeria (IPMAN) in Ejigbo-Lagos, the prices from the refineries and the depots determined the pump prices. He noted that marketers sell what they buy, but the people that determine the prices are those at the depot and the refinery.

Akinade further explained that the cost of crude procurement, refining, product transportation, distribution expenses, foreign exchange movements, and marketers' operating margins also influence the final price paid by consumers. He emphasized that if the depot and refinery prices had been brought down, consumers would see the prices coming down at various stations. The situation highlights the complexities of the petrol pricing mechanism in Nigeria.

The marginal drop in prices came against the backdrop of a decline in Brent crude, the international benchmark for Nigerian crude oil, to about $93 per barrel. Although crude oil prices are a major factor in determining the cost of refined petroleum products, changes in the international market do not necessarily translate into immediate adjustments in domestic pump prices.

Key points

• The decline in Brent crude oil prices to $93 per barrel has not led to significant reductions in petrol prices in Nigeria.
• Petrol prices in Nigeria remain high, with only marginal reductions recorded in some locations.
• The pricing mechanism in Nigeria involves various factors, including crude procurement, refining, transportation, and marketers' operating margins.