The sustained increase in crude oil prices—to $95.70 per barrel on Monday from $94 over the weekend—along with inflation and the weakening of the naira have led to an increase in the price of imported fuel on the international market.
According to the most recent report from the Organisation of Petroleum Exporting Countries, OPEC, news men, the price of the OPEC Basket, which includes the following products: Bonny Light (Nigeria), Saharan Blend (Algeria), Girassol (Angola), Djeno (Congo), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basrah Medium (Iraq), Kuwait Export
Oil traders, who spoke with news men, said refiners would pass the high price of oil to fuel importers, including Nigeria which imports 100 per cent of its petrol from the global market.
But new imports would require more Naira, currently going for N950/United States dollar as the shortage of the dollar continues to impact the nation’s economy.
The National Operations Controller of Independent Petroleum Marketers Association of Nigeria, IPMAN, Mike Osatuyi, could not be reached for comments.
However, an authoritative industry source, who pleaded anonymity, said: “The price of crude oil continues to rise in the international market. At N950/$, foreign exchange is a major problem that can push landing cost to more than N600 per litre, from over N500 per litre. Also, fuel subsidy has risen to more than N160 per litre, from the previous N150 per litre. The market is haunted by instability. This is why oil marketers have not been able to import the product, several months after the deregulation of the market.”
In August 2023, Vanguard reported that the rise in crude oil prices by 7.5 per cent to $85.89 per barrel in August 2023, from $79.92 per barrel in July 2023, depreciation of the Naira to N775/dollar in the official market and inflation, currently standing at 22.79 per cent, combined to increase the landing cost of petrol to N600 per litre in the domestic market.
The landing cost excludes additional costs, including depot-related charges, transportation and marketers’ margin, which would combine to bring delivery at filling stations to more than N700/litre.
Sources around oil marketers had told Vanguard then that the landing cost for September 2023 is expected to rise further as the factors that propelled the rise in August figures have worsened.
Funmi Bashorun, the Business Development Manager for West Africa, wrote in an email answer to newsmen’s questions that “high crude prices and continuous Naira depreciation pose as deterrents to the effectiveness of the deregulation and active participation by more marketers.”
While NNPC Limited and other large marketers continue to offer the product for N568 per litre, their independent competitors charge excessive prices that can range anywhere from N570 to N700 per litre depending on the region of the country.