Oil slump opens door to cheaper petrol for Nigerians squeezed at the pump

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Read History Go to My Account Log Out Enhanced by Google News Oil slump opens door to cheaper petrol for Nigerians squeezed at the pump Nigerian motorists, bus operators and small-business owners who have absorbed months of punishing fuel costs may finally see some relief,

Listen to this article Share Nigerian motorists, bus operators and small-business owners who have absorbed months of punishing fuel costs may finally see some relief, as crude oil tumbled to a 10-week low on signs that the US-Iran conflict could be moving toward a negotiated end.

Brent crude, the international benchmark for Nigeria’s crude, fell as much as 7.9 per cent on Monday to $90.56 a barrel, its lowest level since August 31. It later settled 5.9 per cent lower at $92.57. West Texas Intermediate, the US benchmark, settled 4.4 per cent lower at $86.85.

For a country where petrol prices now move with the global market, the drop matters.

Nigeria’s fuel costs have tracked crude since subsidy removal, and a sustained slide in Brent typically feeds through to refinery-gate and pump prices, usually with a lag of days to weeks.

The catalyst was President Donald Trump’s weekend comments on Iran. Speaking to CNN on Sunday, he said a decision on renewing strikes would depend on “whether or not they sign a very strong agreement . . . The answer is highly unlikely it’s going to be necessary.”

Traders took that as a signal that Washington prefers talks to escalation.

“Trump clearly prefers a diplomatic solution,” said Arne Rasmussen, chief analyst at Global Risk Management.

He cautioned that a substantial gap remained between the two sides, but said oil prices had reacted to a shift in expectations.

The move extends a sell-off that began after the Republicans’ historic defeat in last week’s US midterm elections. Brent recorded its biggest weekly drop since April 2020.

“The US midterm results made it clear that voters want the Iran war to end, and the oil market seems to think [Trump] will heed the people’s will,” Amrita Sen and Daniel Sternoff, energy analysts, wrote in a note.

Three things point toward lower pump prices for Nigerians.

First, the scale of the fall. A weekly decline of the size Brent just posted is the largest since the pandemic collapse of 2020, and it lands at a time when prices had been stretched by war-driven supply fears.

Crude that costs less to buy means cheaper feedstock for refiners, including those supplying Nigeria. Second, physical prices have fallen even faster than futures. Dated Brent, Europe’s physical oil price for immediate delivery, traded at $92.25 on Monday, making it cheaper than oil for delivery in January.

It peaked at $136.39 on October 5, when front-month Brent was at $103.40. Its decline reflects reduced shipping costs and has made feedstock for European refineries cheaper. Because Nigeria’s imported fuel is priced off physical cargoes, that fall in the physical market is the part that matters most to importers and depot owners.

Third, the political backdrop favours lower prices. Voters have signalled that they want the war to end, and markets are betting the White House will listen. Risks ahead

Energy Aspects warned that Iran was unlikely to offer new concessions to Trump when its leaders knew that Congress might start trying to cut war funding in a few months. That could drag out negotiations and keep a risk premium in the market.

Shipping attacks have also continued. The UK Maritime Trade Operations agency said a tanker in the Strait of Hormuz, the vital waterway connecting the Gulf to global markets, was hit by an unknown projectile on Saturday.

Another tanker was struck while exiting the Gulf last Thursday. Those incidents underscore the risks to oil supplies despite what traders see as a more positive diplomatic outlook. A single strike on a tanker or a breakdown in talks could send crude sharply higher again, and Nigerian pump prices would follow.