Some parts of Nigeria, especially Lagos, have started experiencing long queues at petrol stations as fuel prices rises to #1,150 amid growing tensions in the Middle East.
Motorists, commercial drivers and passengers are expressing concern over what they describe as a sudden increase in petrol prices and emerging scarcity, which has also led to higher transportation fares.
Dangote Petroleum Refinery said the ongoing conflict involving the United States, Israel, and Iran has disrupted refinery operations in parts of the Middle East, contributing to the global shortage of refined petroleum products.
According to the refinery, the conflict has reduced refining capacity worldwide, leading to a scarcity of petroleum products.
“The situation has created a global shortage of petroleum products. The conflict has also pushed up crude oil and freight prices sharply, with benchmark Brent crude rising by about 26 percent within a short period to above 84 dollars per barrel,” the company explained.
BBC reporters observed long fuel queues in several parts of Lagos on Friday evening, including Berger, Ikeja, and other busy areas on the mainland, as drivers complained about the rising cost of fuel.
One commercial driver said he recently bought petrol for over ₦1,000 per litre, far higher than the previous price. He added that the struggle to obtain fuel is already affecting his daily business.
Nigerian crude becoming more expensive
The refinery said it would try to cushion the impact of rising international oil prices on the Nigerian market.
While acknowledging that the Middle East crisis is disrupting supply, the company said it would prioritise domestic fuel supply to help stabilise the situation.
“Dangote Refinery will ensure Nigeria is insulated from these supply shocks by prioritising supply to the domestic market. This is one of the many benefits of local refining,” the company stated.
However, it noted that the conflict between the US–Israel alliance and Iran has caused crude oil prices to surge in a short period.
The refinery said it would temporarily absorb about 20 percent of the cost increase to reduce the burden on Nigerian consumers, even though it purchases crude oil at international market prices.
It also revealed that Nigerian crude currently sells at about 3 to 6 dollars above the Brent benchmark price. With an additional freight cost of about 3.50 dollars per barrel, crude oil delivered to the refinery costs between 88 and 91 dollars per barrel.
According to the refinery, its depot price was previously around ₦774 per litre, but rising crude prices have forced an increase.
The company added that it currently receives only five crude cargoes from the Nigerian National Petroleum Company Limited, far below the 13 cargoes required to meet domestic supply needs. As a result, it has had to source additional crude through international traders using foreign exchange.
It also blamed the situation on the failure of some Nigerian upstream producers to supply crude oil as required under the Petroleum Industry Act (PIA).
Ghana reassures citizens of fuel supply
Meanwhile, authorities in Ghana have assured citizens that the country has enough fuel reserves despite the Middle East tensions.
The National Petroleum Authority said the country has enough diesel to last for more than five weeks and petrol stocks that could last over six weeks.
Officials warned, however, that the country—like many others that depend on imported petroleum products—could eventually feel the impact of rising global oil prices.
Why global oil prices are rising
Global oil prices have climbed as Iran continues to launch strikes across the Middle East in response to attacks by the United States and Israel.
Brent crude, the global benchmark for oil prices, recently rose sharply to above 82 dollars per barrel after several ships were attacked near the Strait of Hormuz, one of the world’s most important oil shipping routes.
About 20 percent of the world’s oil and gas supply passes through the Strait of Hormuz, making any disruption in the area a major concern for global energy markets.
Shipping activity in the area has slowed significantly as tensions rise, with analysts warning that a prolonged conflict could push energy prices even higher.
For Nigeria, higher crude prices could increase government revenue and boost foreign reserves because oil exports are a major source of income.
However, the country still imports some refined petroleum products such as petrol and aviation fuel, meaning rising global prices could also push up domestic fuel costs.
Experts warn that if the conflict continues, higher fuel prices could worsen inflation and increase the cost of transportation, food distribution and other essential goods.
READ ALSO:
- Report Claims Gbajabiamila Sought Fast-Track Promotion For Eight Police Officers
- Troops Rescue Kidnap Victims, Recover Explosives In North-East Operations
- Senegal President Fires PM Sonko, Amid Rising Political Tensions
- Exploring the Energy, Music and Culture of Lagos Nightlife
- Afolashade Shona-Aluko inaugurates Association of Female Skilled Artisans in Canada
