The price of Premium Motor Spirit (petrol) could fall to as low as N900 per litre in the coming days if the proposed peace agreement between the United States and Iran succeeds and global crude oil prices continue to decline, industry stakeholders have said.
The ongoing drop in crude oil prices, triggered by easing tensions in the Middle East, has raised hopes among fuel marketers and operators that the cost of petrol, diesel and aviation fuel will soon reduce.
Crude oil, which traded above $120 per barrel in April at the height of the US-Iran conflict, had fallen to about $87 per barrel as of Sunday. The expected reopening of the Strait of Hormuz, a major route for global oil shipments, has further strengthened expectations of lower fuel prices.
The conflict, which began on February 28, pushed crude prices above $100 per barrel and led to a sharp rise in fuel prices worldwide. In Nigeria, petrol prices climbed from around N830 per litre to as high as N1,300 per litre, while diesel and aviation fuel prices also surged.
With oil prices now trending downward, industry observers believe the Dangote Petroleum Refinery may be compelled to implement another price cut.
The refinery had previously reduced its ex-depot petrol price to N1,250 per litre from N1,275 and lowered diesel prices to N1,700 per litre from N1,800 when crude prices dipped below $100 in May.
A source within the refinery disclosed that although current oil prices support lower pump prices, the company is still processing crude purchased at significantly higher prices.
According to the source, petrol could eventually sell for around N900 per litre if crude prices continue to decline and remain stable.
“Yes, N900 per litre petrol is possible if oil prices settle down, but we still have expensive crude stock in storage,” the source said.
The Petroleum Retail Outlet Owners Association of Nigeria (PETROAN) also projected that petrol prices could drop below N1,000 per litre once the Strait of Hormuz reopens.
PETROAN spokesperson Joseph Obele noted that petrol sold for around N800 per litre before the Middle East crisis and expressed optimism that prices could return close to those levels.
“If the Strait of Hormuz is reopened, Nigerians should expect a major reduction in petrol prices. Petrol could fall below N1,000, possibly to N900 per litre. Before the crisis, the product was selling for around N800, and with peace returning, we expect prices to move back towards that level,” he said.
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US President Donald Trump recently announced that a peace agreement with Iran would be signed and assured that the Strait of Hormuz would be reopened for international shipping.
He said the proposed deal would prevent Iran from developing nuclear weapons and stressed that no money would exchange hands between both countries.
Industry operators believe the successful implementation of the agreement could trigger another round of competition among fuel marketers, especially as imported products continue to arrive in Nigeria.
Checks in the downstream sector already show that some marketers have begun offering petrol at ex-depot prices below the current N1,250 per litre benchmark set by the Dangote refinery, signalling the possibility of further price reductions if crude prices continue to slide.
