The price of Premium Motor Spirit popularly known as petrol, may drop to as low as N900 per litre in the coming days if the proposed peace deal between the United States and Iran materialises and crude oil prices continue their downward trend, industry operators have stated.
The recent crisis in the Middle East have caused a sustained decline in global oil prices, fuelling expectations that fuel prices could also fall at the pumps.
From over $120 per barrel in April, crude oil prices dropped to about $87 per barrel as of Sunday. The sustained decline, coupled with plans to reopen the Strait of Hormuz, is generating cautious optimism among fuel marketers that prices of petrol, diesel and aviation fuel may ease in the coming days.
It will be recalled that crude oil, the major feedstock for fuel production, rose from below $70 per barrel after the US-Iran conflict began on February 28. During the more than three months of hostilities, crude traded above $100 and at some points exceeded $120 per barrel, leading to a sharp increase in fuel prices globally.
In Nigeria, petrol prices rose from about N830 per litre to N1,300 per litre. Diesel and aviation fuel prices also increased significantly, with airline operators at some point warning that rising costs could affect operations.
With crude prices continuing to fall in recent days, speculation has intensified that the Dangote Petroleum Refinery may consider another reduction in petrol prices to reflect current market realities.
Recall that the refinery reduced the gantry price of petrol to N1,250 per litre from N1,275 per litre, while diesel was cut to N1,700 per litre from N1,800 per litre. The adjustment was made on May 30 when crude prices dropped below $100 per barrel.
At the current crude price of $87 per barrel, a source within the Dangote refinery said a reduction in the gantry price would ordinarily be expected, but the refinery still holds a substantial volume of crude purchased at much higher prices.
According to the source, petrol could sell for as low as N900 per litre if crude prices continue to decline. “Yes, N900/litre petrol is possible if oil prices settle down, but we still have the expensive crude stock in our tanks.”
