Petrol price increase fears grow as crude oil hits $115 per barrel

Nigerians could face another petrol price increase as international crude oil prices climb, with Brent crude reaching $115.18 per barrel on Friday amid concerns about renewed military conflict in the Middle East and possible disruptions to global oil supplies.

The rise comes as Dangote Petroleum Refinery and other depot owners sell petrol at N1,350 per litre at their gantries, putting consumers at risk of further increases if crude prices remain elevated.

Higher crude prices can raise the cost of supplying refined petroleum products, depending on refiners’ procurement costs, refining margins, logistics and prevailing market conditions. Marketers facing higher replacement costs may pass some of the additional expenses on to consumers.

According to Oilprice.com, Brent crude gained 1.8 per cent to $115.18 per barrel on Friday, reaching a five-month high. US West Texas Intermediate crude futures also rose by two per cent to $101.56 per barrel.

The rally was driven by concerns that Washington could resume military strikes against Iran in the coming weeks, alongside attacks on energy infrastructure and shipping routes across the Middle East.

Reuters reported that Brent had touched $115.16 per barrel, its highest level since May 4, following attacks by Houthi militants in Saudi Arabia that heightened fears of further disruptions to energy supplies. The benchmark was on course for a weekly gain of about five per cent, which would mark its third consecutive week of increases.

West Texas Intermediate was also heading for a weekly gain, although its increase was smaller.

The heightened tensions followed remarks by United States President Donald Trump on Wednesday that Washington was not negotiating with Iran and that something would happen “fairly soon”. Reports also indicated that US and Israeli officials were considering fresh strikes against Iran after the American midterm elections.

Iran’s army chief said the country’s military was prepared for “asymmetric warfare” after strengthening its capabilities, according to Iranian state media agency Tasnim.

Concerns have also spread to Saudi Arabia, where Houthi militants have continued attacks. The US State Department ordered non-essential personnel to leave the country amid security concerns.

A drone attack targeting the Shaybah oil field in Saudi Arabia’s Eastern Region reportedly killed two people and injured two others. Another attack on King Fahd International Airport in Dammam left at least two people dead and eight injured, according to Saudi state media.

Reuters also reported that Saudi Aramco had directed staff to evacuate its headquarters in Dhahran and work remotely following attacks by Iran-backed Houthi rebels.

The developments have increased concerns about possible disruptions to crude production, exports and shipping in the Middle East, a major source of global energy supplies.

The Strait of Hormuz remains a particular concern because a significant share of the world’s oil shipments normally passes through the strategic waterway. Disruptions to shipping can tighten supply and increase freight and insurance costs, adding to volatility in international oil markets.

For Nigeria, sustained increases in crude prices could put further pressure on petrol costs, depending on the cost of crude supplied to domestic refineries, imported products and other expenses along the supply chain.

Dangote Petroleum Refinery last announced an increase in its petrol gantry price from N1,265 to N1,350 per litre, effective September 12.

No new petrol price increase had been announced by refiners or importers at the time of the report.

Nigeria’s petrol prices remain exposed to movements in international oil markets. Although the country has domestic refining capacity, crude procurement costs, refined-product prices, logistics and market conditions can still influence the price at which petrol is supplied.

A prolonged rise in crude prices could increase operating and replacement costs for suppliers. Any resulting increase in petrol prices would add to the financial pressure on households and businesses already dealing with high transport and living expenses.

However, the rise in crude prices does not automatically mean petrol prices will increase immediately. The extent and timing of any change depend on the costs and pricing decisions of refiners, importers and marketers.

“The opportunity before Nigeria is significant.”

No direct statement from a Nigerian refiner, importer or government official on a new petrol price increase was included in the source report, so no additional quote has been attributed to them.

The direction of international crude prices and developments in the Middle East will remain important factors for Nigeria’s petrol market. Consumers and marketers will be watching whether crude prices stay elevated and whether refiners or depot operators announce changes to their selling prices.

Brent crude’s rise above $115 per barrel has heightened the risk of another petrol price increase in Nigeria. However, no fresh increase had been announced, and the eventual effect on pump prices will depend on crude costs, refining and distribution expenses, and market pricing decisions.

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