June 19, 2024

Petrol prices set to exceed N700 per litre, as Bonny light crude trades at $85 per barrel

EnergyDay global crude oil price analysis

Oredola Adeola


The prices of Premium Motor Spirit (Petrol) in Nigeria are expected to rise to N700 per litre in the coming months due to the recent uptick in global crude oil prices, even as Brent Crude oil traded at $83 per barrel, while WTI Crude hit $79.91/b, and Nigeria’s Bonny Light crude oil rose above $85 per barrel at the international market as at Friday, 28, 2023.

EnergyDay’s check showed that Brent crude which influences the prices at which Nigeria’s Bonny Light crude is traded, started rising from Monday July 17 when it was $78.5 per barrel to $83.25/b on Tuesday, July 25 and went upward to $84.03/b as of Friday, July 28.
Bonny light on its part rose to $85 per barrel at the international market as at Friday, 28, 2023, compared with previous prices earlier in the year, such as $74.35 per barrel in March 2023 and $73.87 per barrel in the same month.
EnergyDay findings showed that the price is still lower than the price of $117.58 recorded on July 31, 2022.
The increase crude oil price increase will therefore influence the hike in petrol prices, expected to have a significant impact on Nigerians.
The domestic fuel costs have already tripled over the last month and are expected to rise even further in alignment with petroleum product marketers’ projections of rise in pump price above N700 per liter in the coming months.
If the present market dynamic is sustained EnergyDay gathered that Nigeria is record more than $10 per barrel or more, in excess of $75 per barrel that the country’s 2023 budget was predicated on, translating to more revenue earnings for the country in the current fiscal year.




EnergyDay gathered that the global prices of crude oil have not been this high since mid-April and there are speculations from the oil markets that there will be a significant tightening this half of the year, with demand signals continuing to be strong while production is still artificially restrained in OPEC+ members and U.S. production fails to gain traction.


Paris-based, International Energy Agency (IEA) has warned of a tightening supply-demand picture, which it said will shoot the price as high as $100per barrel. It recently suggested that global oil demand will eclipse supply by almost 2 mb/d in the second half of 2023, which will shoot prices to around $100 per barrel.


The movement of price from below $70/b for the whole of the month and now making some recovery is also connect to the decision of OPEC+ members to an additional 1.6 million barrels per day of voluntary cuts at the start of April.


Goldman Sachs, investment bank had also predicted that oil prices will rise due to record-high oil demand and lower supply, creating a large market deficit.


It predicted the price would rise above $80 per barrel now to $86 per barrel by year-end, suggesting further that the crude oil production cuts by OPEC could result in a significantly larger deficit in the market, driving a rally in prices to $100 per barrel by April 2024. 




Nigerians are therefore expected to prepare for a very sharp increase in pump prices of petrol in the next couple of months now that the downstream sector is determined by market forces and under a free-market system market dynamic, following the removal of the petrol subsidy by the President Bola Tinubu’s administration.


Mr. Mike Osatuyi, National Controller, Operations, Independent Petroleum Marketers Association of Nigeria(IPMAN) has recently said that the pump price of petrol could hit N700 per litre, on the sideline of importation of the products from July, by marketers.


Although, Osatuyi has called on Nigerians to hold the government accountable as the savings from subsidy payments are being added to the Nigerian National Petroleum Company Limited’s remittance to the sovereign wealth fund, which is expected to increase the money to be shared by the three tiers of government to N3 trillion by the end of July.


Major Oil Marketers Association of Nigeria (MOMAN) in a press conference held last week, noted that national average pump price was arrived at with current exchange rate, which means that the exchange rate is also a factor that could cause petrol prices to fluctuate.




EnergyDay’s check showed that the exchange rate at the official market is N725.7 against $1, while it is above N800 at the parallel market as of June 27, 2023.


The expected increase in petrol prices has raised concerns among Nigerians, as it could lead to higher transportation costs and inflation.




The Nigeria Labour Congress (NLC) in a recent statement threatened to embark on a nationwide strike over the hike in the cost of living caused by the removal of petrol subsidy following the resolution by its central working committee on Tuesday, July 25.


The labour union threatened to stop work in protest should the Federal Government refuse to reverse all anti-poor policies, such as the recent petrol pump price hike, within seven days.


The NLC had planned to protest the subsidy removal in June but suspended the planned protest after a meeting with government officials. Although no resolution was made, the labour union halted the proposed industrial action saying it intends to “continue ongoing engagements with the Federal Government and secure closure on the resolutions”.


The NLC has reportedly given the federal government seven days to address its demands, failing which it will embark on strike on August 2, over the government’s policies, including the recent hike in the price of petrol, increase in public school fees, among others.



The labour union vowed that it will commence a nationwide strike from August 2, despite the order of the Industrial Court of Nigeria, which prohibited the congress from going on strike.


Olumide Adesina, a public affairs commentator, expressed his concern about the rising global price of petrol. He stated that it would be difficult for the price of petrol to remain below N700 per liter, especially considering the recent increase in the value of the dollar and crude oil prices exceeding $80 per barrel.

According to Adesina, the increase in oil prices has led to oil traders locking in profits after significant gains.
He said that the situation will have a negative impact on Nigerians, as the rising prices will put additional pressure on energy costs.
EnergyDay has confirmed that there are limited measures in place to mitigate the effects of fuel subsidy removal on citizens. This means that any rising crude oil price may lead to additional increases in pump price across the country, with attendant impact.