By Okafor Joseph Afam, January 13, 2025

The cost of refined petroleum products in Nigeria is expected to increase following a surge in the price of Brent crude, the global benchmark for oil. On Sunday, Brent crude climbed to $79.76 per barrel, up from $72.88 recorded in December 2024.

Crude oil prices are a key determinant of the cost of refined petroleum products. The recent rise is attributed to geopolitical tensions, including sanctions on Russian oil exports, seasonal demand spikes in colder regions, and supply concerns.

Depots Already Reflecting Price Hikes

Several Nigerian fuel depots have already begun adjusting prices in response to the rising crude costs. On Friday, diesel prices at the Nipco depot in Lagos increased by N70, moving from N1,050 to N1,120 per litre. Similarly, Prudent depot recorded an increase, closing the week at N1,045 per litre compared to an earlier N1,025.

Oil and gas expert Olatide Jeremiah, CEO of Petroleumprice.ng, commented on the trend, stating, “It implies that there is a possibility of increased fuel prices, particularly diesel prices. A large chunk of oil marketers import petroleum products, and Brent crude is a major determining factor in the refining process.”

Impact on the Market

The Nigerian market, heavily reliant on imports for refined petroleum products, is particularly sensitive to fluctuations in global crude prices. Importers are likely to adjust prices to cover rising procurement and shipping costs, further impacting fuel prices across the country.

With the Federal Government’s oil price benchmark set at $75 per barrel in the 2025 budget, the recent surge in Brent crude prices could create additional pressure on fuel costs.

Analysts have also noted the strong correlation between crude oil prices and refined products like diesel. The upward trend is expected to persist if Brent prices remain above $75, leading to potential increases in pump prices in the coming days.

Looking Ahead

As oil prices approach the $80 per barrel mark, Nigerians may need to brace for higher costs of fuel, particularly diesel. The adjustments already observed at depots signal the likelihood of further price hikes, emphasizing the country’s vulnerability to global market dynamics.