Global crude oil prices may cross $80 per barrel this week, following the major escalation in tensions between the United States and Iran, with the oil market reacting sharply to reports of coordinated US-Israeli airstrikes on key Iranian nuclear facilities.
This came as marketers of petroleum products said petrol prices may soon rise to N1,000 per litre due to rising crude oil prices and the volatility in the foreign exchange market. This development follows a “preemptive defensive strike,” overnight attacks launched by the United States on three of Iran’s major nuclear sites.
The strike, as announced by President Donald Trump, “obliterated” Tehran’s critical nuclear infrastructure, joining an Israeli assault in an escalation of conflict in the Middle East as Tehran vowed to defend itself. Iran is OPEC’s third-largest crude producer. In a swift retaliation, the Iranian parliament has reportedly moved to shut the Strait of Hormuz, a strategic chokepoint that handles nearly a fifth of the world’s oil supply. The move sent immediate shockwaves through the global energy market, with Brent crude trading higher in the early hours and analysts projecting further gains.
Concerned by this trend, energy analysts on Sunday warned that the surge in global crude oil prices could push the pump price of Premium Motor Spirit (petrol) in Nigeria to as high as N1,000 per litre in the coming weeks, should Brent crude hit the $80 per barrel threshold.
The Chief Executive Officer of PetroleumPrice.ng, Olatide Jeremiah, said private depots are already gearing up to effect a hike in loading cost on Monday. He stated, “Private depots are likely to increase petrol price to N1,000 in the coming days with the current trend observed in the market. If by tomorrow morning, crude price increases to $80 or exceeds that threshold, Nigerians would pay N1,000 at depots.
“The situation means they will take advantage of Nigerians, but we can only hope that Dangote maintains its current price, that is the only way depot owners won’t jack up the price anyhow. The price surge seen last week was basically because Dangote stopped selling for some days. But it has opened up its portal and is now selling at N880 for two million litres. Dangote remains a major determinant of petrol price.”
According to the Independent Petroleum Marketers Association of Nigeria, the heightened crisis between Israel and Iran has continued to push up crude prices, prompting a rise in global petrol prices. On Friday, the Dangote refinery jerked up petrol prices from N825 to N880. In response, MRS Oil Nigeria and other filling stations selling Dangote petrol raised their pump prices to an average of N955 in the South East and North West.
One of our correspondents observed on Sunday that other filling stations have also hiked their prices to between N930 and N960, depending on the location. Lagos has the cheapest rate as MRS and other Dangote partners sold petrol at N925 per litre on Sunday.
Speaking with The PUNCH on Sunday, the National Publicity Secretary of IPMAN, Chinedu Ukadike, linked the recent price hike to instability in the global crude market due to the Israel-Iran crisis and an unstable foreign exchange situation.
“There is a crisis between Israel and Iran, and Brent crude has gone up from around $66 to about $77 per barrel,” Ukadike said. He explained that the price of crude in the international market directly impacts the cost of domestic petrol, adding that the volatility in the exchange rate also compounds the challenge.
