Crude Oil Surge Pushes Petrol Prices Higher, Raises Cost-of-Living Concerns

Nigerians are facing fresh pressure on transportation, household budgets and business operations as international crude oil prices rise above $100 per barrel, triggering higher petrol prices across the country.

In Lagos and its environs, MRS filling stations have increased the price of petrol from N1,300 to N1,400 per litre, a N100, or 7.7 per cent, rise.

NNPC Limited filling stations have also adjusted their pump price upward, from N1,275 to N1,375 per litre. Some independent marketers, meanwhile, have moved their prices from about N1,360 to N1,400 per litre.

The price increases came after Dangote Petroleum Refinery raised its petrol gantry price to N1,350 per litre, amid higher crude oil prices and increasing costs throughout the petroleum supply chain.

The immediate effect is expected to be felt in the transport sector, where petrol-powered vehicles face higher operating expenses.

Commercial buses, taxis, tricycles and other transport operators could increase fares as they seek to offset the additional cost of fuel. Vanguard checks showed that commuters may consequently face greater pressure, particularly workers, students, traders and other Nigerians who depend on daily transportation to access workplaces, schools, markets and business centres.

Beyond transportation, the higher fuel price could have wider economic consequences.

The cost of moving food, raw materials and finished goods is likely to rise, potentially prompting distributors and retailers to transfer additional logistics costs to consumers. This could translate into higher prices for food and other essential goods.

Households that use petrol-powered generators are also likely to spend more on electricity generation, while small and medium-sized businesses could see their profit margins squeezed by rising fuel, transport and power costs.

Manufacturers, retailers, logistics companies, restaurants and other businesses that rely on fuel for production, distribution or backup electricity may have to reassess their operating expenses, with some potentially increasing the prices of their goods and services.

The chain reaction could add further inflationary pressure as higher energy and transportation expenses feed into the broader cost of goods and services.

Commenting on the development in a telephone interview with Vanguard, the National President of Oil and Gas Services Providers Association of Nigeria, OGSPAN, Mazi Colman Obasi, said: “The immediate trigger is the sharp rise in international crude oil prices, which has increased the cost of refined petroleum products and altered the economics of domestic fuel supply.

“With Nigeria’s downstream market largely deregulated, pump prices are increasingly influenced by international crude prices, refined-product costs, freight, exchange rates and other supply-chain expenses.

“If crude prices remain above $100 per barrel or rise further, domestic petrol prices could come under additional pressure. For transporters, the immediate concern is the cost of keeping vehicles on the road. For commuters, it is higher fares.

“For households, it is increased spending on transportation, food and electricity and for businesses, it is rising logistics, production and energy costs.

‘’If the crude-price rally persists, the pressure could extend further across the Nigerian economy, deepening concerns over the cost of living and doing business.”

Also speaking earlier, Victoria Ibezim-Ohaeri, Executive Director, Spaces for Change, said households would likely experience the effects through higher transportation and food costs.

“For households, the most immediate concern is likely to be higher transportation and food costs,” she said.

‘’Higher fuel and logistics costs can raise the cost of moving people and goods, while households and businesses that rely on petrol- or diesel-powered generators may face additional energy expenses.

“These pressures could further reduce purchasing power, particularly for low- and middle-income households. Nigeria’s headline inflation rate currently stands at 15.43%, while food inflation is 20.31%, according to the National Bureau of Statistics, NBS.

“Businesses across manufacturing, agriculture, construction, retail and logistics are similarly exposed to higher energy, transportation and input costs. If the shock persists, firms may pass additional costs on to consumers, absorb lower profit margins, postpone investment or reduce employment.

‘’Consequently, a prolonged oil-price shock could constrain the recovery of the non-oil economy even as the oil sector benefits from higher crude prices.

“In the coming weeks, volatility is likely to remain the central concern. Continued conflict and disruption to major shipping routes could keep crude and refined petroleum prices elevated. Recent disruptions have already reduced oil flows through the Strait of Hormuz and contributed to higher shipping and fuel costs.”

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