Rising crude oil prices could drive up petrol costs, inflation in Nigeria

The cost of premium motor spirit (PMS) and other refined petroleum products in Nigeria may rise in the coming days following a surge in crude oil prices.

Brent crude reached $81.09 per barrel on Monday, up from around $76 the previous week.

This price hike exceeds the $75 per barrel benchmark set in Nigeria’s 2025 budget proposal and stems from global geopolitical tensions, including sanctions on Russian oil exports, which have fueled supply concerns.

The increase in crude oil prices may raise the ex-depot prices of refined fuel products, with immediate effects already visible in diesel prices.

Reports indicate that diesel prices in Lagos depots rose by N70, climbing from N1,050 to N1,120 per liter.

Similarly, the landing cost of petrol, which was N887.51 per liter as of December 19, 2024, is expected to rise, potentially reversing recent reductions in retail prices.

Nigerians currently pay between N935 and N1,100 per liter for petrol, following a reduction announced last year by Dangote Refinery and the Nigerian National Petroleum Company Limited.

An increase in petrol prices is expected to exacerbate inflation, which already stands at 34.60 percent for the headline rate and 39.93 percent for food inflation as of November.

This rise will likely impact transportation costs and the prices of goods and services, further straining household budgets.