The price of Premium Motor Spirit (petrol) may drop to as low as N900 per litre in the coming days if the proposed peace deal between the United States and Iran materialises and crude oil prices continue their downward trend, industry operators have stated.
Recent developments in the Middle East have triggered a sustained decline in global oil prices, fuelling expectations that fuel prices could also fall at the pumps.
From over $120 per barrel in April, crude oil prices dropped to about $87 per barrel as of Sunday. The sustained decline, coupled with plans to reopen the Strait of Hormuz, is generating cautious optimism among fuel marketers that prices of petrol, diesel and aviation fuel may ease in the coming days.
Recall that crude oil, the major feedstock for fuel production, rose from below $70 per barrel after the US-Iran conflict began on February 28. During the more than three months of hostilities, crude traded above $100 and at some points exceeded $120 per barrel, leading to a sharp increase in fuel prices globally.
In Nigeria, petrol prices rose from about N830 per litre to N1,300 per litre. Diesel and aviation fuel prices also increased significantly, with airline operators at some point warning that rising costs could affect operations.
With crude prices continuing to fall in recent days, speculation has intensified that the Dangote Petroleum Refinery may consider another reduction in petrol prices to reflect current market realities.
Recall that the refinery reduced the gantry price of petrol to N1,250 per litre from N1,275 per litre, while diesel was cut to N1,700 per litre from N1,800 per litre. The adjustment was made on May 30 when crude prices dropped below $100 per barrel.
At the current crude price of $87 per barrel, a source within the Dangote refinery told our correspondent that a reduction in the gantry price would ordinarily be expected, but the refinery still holds a substantial volume of crude purchased at much higher prices.
The source, who spoke on condition of anonymity because he was not authorised to speak to the media, said petrol could sell for as low as N900 per litre if crude prices continue to decline. “Yes, N900/litre petrol is possible if oil prices settle down, but we still have the expensive crude stock in our tanks,” the source confirmed to The PUNCH.
Earlier, the Petroleum Retail Outlet Owners Association of Nigeria projected that petrol prices could fall below N1,000 per litre if the Strait of Hormuz is reopened. Speaking in an interview with our correspondent, PETROAN’s Publicity Secretary, Joseph Obele, said fuel prices would decline further as crude oil prices ease.
Obele recalled that petrol sold for around N800 per litre before February 28, when the conflict started, expressing optimism that a sharp reduction could occur if current developments are sustained.
“If the Strait of Hormuz is reopened, Nigerians should expect a very significant reduction in petrol prices. Petrol will fall below N1,000, probably to N900/litre. Don’t forget that the product was N800+ before the Middle East crisis. Now that the war is getting over, we should be expecting a return to that price regime,” he said.
In a social media post on Saturday, US President Donald Trump said a peace deal with Iran would be signed on Sunday and that the Strait of Hormuz would be opened to all.
He said the agreement differs significantly from that negotiated by former US President Barack Obama, which he described as a pathway to Iran acquiring nuclear weapons.
“My agreement with Iran is the exact opposite: A WALL TO NO NUCLEAR WEAPON! In fact, they no longer want a nuclear weapon, nor will they have one, either through purchase, development, or any other form of procurement. The deal is scheduled to get signed tomorrow (Sunday), and immediately after it is signed, the Hormuz Strait is OPEN TO ALL,” Trump said on social media.
He added, “Our relationship with Iran is a much different and better one than previous administrations have had. Unlike Obama’s hundreds of billions of dollars in payments to them, including $1.7bn in green, cold cash, no money will exchange hands.
“At the appropriate time, when all is calm, we will go in and get the nuclear dust buried deep under the powerful sunken granite mountains… and downblend and destroy it, whether in Iran or the United States. We look forward to working with Iran and the entire Middle East, long into the future.”
Trump expressed confidence that the process would be completed quickly and smoothly, while warning, “If it doesn’t, we have the ultimate alternative, hopefully never to be used again!”
Meanwhile, checks by our correspondent showed that some marketers have already reduced their PMS ex-depot prices to below N1,250 per litre, which remains the current Dangote benchmark as of Sunday.
As petrol imports continue into the country, operators expect a fresh round of price wars if the US-Iran deal succeeds, the Strait of Hormuz reopens, and crude oil prices return to pre-conflict levels.
