Petrol prices to hit N1,000 as crude falls on US-Iran propose peace deal

Depot prices of Premium Motor Spirit (PMS), popularly known as petrol, across Nigeria is expected to decline to N1,000 per litre as the strait of Hormuz reopens on US-Iran proposed peace deal.

BusinessDay’s analysis showed that when Brent crude traded around $84 per barrel in March, Dangote Petroleum Refinery reduced its gantry price for PMS to N1,075 per litre.

Since the announcement of a peace deal by Donald Trump, president of the US, over the weekend, crude oil prices have fallen by more than 4 percent. According to oilprice, Brent crude fell to $83.3 per barrel while West Texas Intermediate traded at $80.5 per barrel on Monday afternoon.

With Brent, the benchmark of Nigeria’s crude, trading near $83 per barrel and continuing to weaken, industry analysts project that petrol prices could fall to around N1,000 per litre in the coming weeks if current market conditions persist.

The anticipated reduction would offer some relief to consumers and businesses already grappling with high transportation and energy costs following months of fuel price volatility.

Meanwhile, reports revealed that sources within Dangote Refinery said a price reduction is increasingly likely, although the timing may depend on the refinery’s ability to exhaust inventories of crude oil purchased at significantly higher prices.

According to a source familiar with the refinery’s operations, the company is still processing substantial volumes of crude acquired when international oil prices were considerably higher.

“Yes, N900 per litre petrol is possible if oil prices settle down, but we still have the expensive crude stock in our tanks,” the source said.

Another refinery source said global oil prices would remain the key determinant of future pricing decisions.

“If oil prices continue to fall and the US-Iran deal is signed, most likely there is going to be a deduction in price,” the source said.

The expectation of lower prices is already influencing market behaviour.

Several independent marketers have reportedly slowed fresh purchases of petrol and diesel, adopting a wait-and-see approach as they anticipate further declines in ex-gantry and depot prices.

Industry checks indicated that some marketers are deliberately reducing stock accumulation to avoid being caught with expensive inventory if suppliers announce fresh price cuts.

The development could intensify competition across Nigeria’s downstream sector, particularly in Lagos, where private depot operators have recently engaged in aggressive pricing strategies to attract buyers.

Analysts said a sustained decline in international crude prices would likely trigger another round of price adjustments among suppliers, potentially leading to lower pump prices nationwide.

The prospect of cheaper fuel follows weeks of volatility in global oil markets, driven largely by geopolitical tensions in the Middle East and concerns over disruptions to crude exports through the Strait of Hormuz.

However, recent diplomatic progress between Washington and Tehran has improved market sentiment, easing fears of prolonged supply disruptions and contributing to the retreat in oil prices.

Energy analysts cautioned that while lower crude prices create room for fuel price reductions, the pace and magnitude of any adjustment will depend on several factors, including exchange rate movements, logistics costs and existing crude procurement contracts.

They also noted that refiners typically require time to work through higher-cost inventories before passing lower crude prices through to consumers.