The Executive Secretary and Chief Executive Officer of the Major Energy Marketers Association of Nigeria (MEMAM), Clement Isong, has stated that government-imposed price caps on petroleum products are not the solution to the challenges facing the Nigerian petroleum market. According to Isong, price capping leads to market distortions and a lack of competitiveness among operators. He made this statement during a virtual webinar organised by MEMAN in partnership with S&P Global Energy.
Isong suggested that instead of price capping, the government should focus on a transparent, market-driven pricing regime, efficient distribution, and measures to address supply bottlenecks and reduce operating costs. He also advocated for a well-structured market that would enable competition, improve supply security, and support better outcomes for customers without relying on government-imposed price controls or broad-based fuel subsidies.
Isong outlined other priorities for improving the efficiency and resilience of Nigeria's domestic distribution market. He emphasized that supply coordination can be achieved if the government prioritizes domestic refinery output and uses imports to bridge supply gaps and manage disruptions. Additionally, he suggested that bulk supply arrangements can be achieved through clearer terms of engagement to drive product access, pricing, delivery schedules, and contractual obligations.
During the webinar, S&P Global Energy acknowledged the impact of geopolitical tensions, including refining disruptions and changing global supply dynamics, on petroleum products pricing. The organization noted that there is an urgent need for regional pricing benchmarks that better reflect West African market conditions. They emphasized that greater transparency, reliable market data, and industry adoption are essential to building a credible reference market.
The diesel crunch and record diesel prices are expected to persist well into 2027. The recent rise in crude oil flows out of the Strait of Hormuz has not solved the world's most pressing fuel problem. Global diesel supply is much lower due to refinery constraints in the Middle East and Russia that the rest of the world cannot offset. The diesel squeeze has hiked wholesale and retail prices to record highs.
The International Energy Agency (IEA) has stated that the current crunch in the diesel and gasoil markets is set to extend into the middle of next year. The agency noted that counter-seasonally, gasoil and diesel markets tightened in the third quarter of 2026, amid prolonged disruptions in refinery operations in the Middle East and Russia. The IEA also emphasized that falling inventories, soaring cracks, and steepening levels of backwardation have signaled the need for additional supplies.
The global diesel market is experiencing a shortage that additional crude exports alone cannot resolve. Both U.S. ultra-low sulfur diesel (ULSD) and European gasoil futures have moved back to trade above $200 per barrel equivalent, reflecting a shortage that cannot be solved by increased crude oil exports. The diesel market remains far from normal, with refined-product exports severely constrained.
Key points
- Government-imposed price caps are not the solution to Nigeria's petroleum market challenges.
- The diesel crunch and record diesel prices are expected to persist well into 2027.
- A well-structured market with transparent pricing and efficient distribution is needed to address Nigeria's petroleum market challenges.
