Fuel price swings in Nigeria are being driven by market forces rather than regulatory action as the country operates a fully deregulated downstream petroleum sector, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) said yesterday.
According to the regulator, recent increases in the pump price of petrol, known locally as Premium Motor Spirit (PMS), reflect supply and demand dynamics tied to rising global crude prices following escalating tensions in the Middle East.
“Nigeria has been operating a fully deregulated downstream petroleum regime since the inception of the current administration. Therefore, pump price vagaries are purely a result of market dynamics,” NMDPRA spokesperson George Ene-Ita said in an interview in Abuja on March 8.
Under the current regime, petrol prices are determined by import costs, global oil benchmarks, foreign exchange rates and distribution margins, rather than government price controls. Ene-Ita said differences in pump prices across retail outlets nationwide stem from these market variables.
Nigeria scrapped long-standing petrol subsidies in 2023, shifting the sector toward deregulation after decades of government intervention that had kept prices artificially low but strained public finances.
Recent increases in pump prices have followed a surge in global crude oil markets linked to the escalating conflict involving Iran, Israel and the United States.
On March 3, the Nigerian National Petroleum Company Ltd. raised the pump price of petrol at its retail stations in Abuja to about 960 naira ($0.60) per liter, from 875 naira previously. The increase came as global oil prices climbed amid fears that the widening conflict could disrupt Middle East supply routes.
Dangote Petroleum Refinery, the country’s largest refining project, also raised its ex-depot or gantry price by 100 naira to 874 naira per liter from 774 naira, according to industry officials.
The higher depot price affects marketers who purchase refined products from the refinery and distribute them nationwide, often translating into higher retail pump prices.
Billy Gillis-Harry, president of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), said the increase in Dangote refinery’s price would likely ripple through the broader economy.
Higher fuel costs typically feed into transportation and logistics expenses in Nigeria, raising prices for goods and services across the economy.
Global oil markets have rallied sharply as the Middle East conflict threatens supply infrastructure in one of the world’s largest energy-producing regions.
Brent crude futures surged about 20 percent last week, while U.S. benchmark West Texas Intermediate climbed roughly 25 percent, according to commodities market data.
The rally has been partly driven by attacks on energy facilities across the region.
On Saturday, Israeli forces struck oil storage facilities in Tehran in what analysts say was the first reported attack on Iran’s oil infrastructure since the conflict escalated. Iran has also launched retaliatory strikes targeting energy facilities across the Middle East and Gulf region, where U.S. forces operate in several countries.
Saudi Arabia’s state oil company halted operations at a major refinery in the kingdom’s Eastern Province after a drone strike disrupted facilities capable of processing more than 500,000 barrels of crude per day, according to regional reports.
In Qatar, authorities temporarily suspended downstream production after energy facilities in Ras Laffan Industrial City and Mesaieed Industrial City were hit in a series of strikes.
The attacks have affected energy infrastructure across several Gulf states, including the United Arab Emirates, Kuwait, Qatar, Bahrain and Oman, raising concerns about supply disruptions in the global oil market.
Iran has since indicated it would avoid targeting neighboring countries unless attacks against its territory originate from those states, easing some fears of a broader regional escalation.