The Nigerian National Petroleum Company Limited (NNPCL) has adjusted the pump price of Premium Motor Spirit (PMS) to ₦617 per litre from ₦550 at fuel stations in Abuja which have affected consumers in the city.
Barely two months after President Bola Tinubu declared the removal of subsidy, a fresh hike in fuel prices was announced on Tuesday.
In contrast, fuel outlets in Lagos are currently selling petrol at prices ranging from ₦492 to approximately ₦600.
With Nigerians voicing their discontent over the recent fuel price hike, Mr. Mike Osatuyi, the National Operations Controller of the Independent Marketers Association of Nigeria (IPMAN).
The first reason behind the fuel price hike is the increase in crude oil prices in the international market. The benchmark price for Brent crude has risen above $80 per barrel for the first time since May 2023, indicating a gradual tightening of supply and expanding demand.
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The decision by Saudi Arabia to cut its oil production by 1 million barrels per day, commencing in June, has had a direct impact on the increase in fuel prices.
The depreciation of the naira against the US dollar, with the exchange rate closing at ₦795.28/$1 at the official Investor and Exporters window, also played a role in the fuel price increase.
The fuel price increase was based on the President’s directive for a unified exchange rate. On Monday, 17th July 2023, the exchange rate traded at ₦820/$1 at the unofficial I&E Window.
Companies importing petroleum rely on foreign currency, and the delay in imports is due to their requirement for additional naira to be converted into dollars for the importation.
Due to the diminishing strength of the naira, which is now surpassing ₦800 to a dollar, companies need larger amounts of naira to be converted into dollars for importing. The cheaper value of the naira is evident compared to previous rates.
will the price see a decline in the future?
While discussions continue regarding the potential drop in fuel prices, it should be acknowledged that this outcome will be subject to market forces.
The prevailing expectations indicate that the price will go down in due course, as competition intensifies, leading to an increased supply in the domestic market.
Fuel pump prices in the country, as highlighted by Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), accurately mirror the commodity’s current market price.