Crude Oil Price Drop Leads to Reduction in Domestic Petroleum Product Costs

Crude oil prices have experienced a significant drop of 8% to $78.17 per barrel, down from over $85 per barrel over the weekend. This decline has led to a reduction in the prices of imported petroleum products in the domestic market.

Previously, when crude oil was priced at $85 per barrel, the cost of diesel had surpassed N1,145 per litre. However, according to the latest report from the Major Energy Marketers Association of Nigeria (MEMAN), the price of imported diesel has fallen to N1,045.15 per litre, marking an 8.7% decrease from the earlier price of N1,145 per litre. The report also revealed that the price of Premium Motor Spirit (PMS), commonly known as petrol, has decreased to N922.65 per litre, down from N939.50 per litre.

MEMAN’s report highlighted several factors influencing the landing costs of petroleum products in Apapa, Lagos, including a 32% finance cost, a 2% Nigerian Maritime Administration and Safety Agency (NIMASA) levy, and additional levies from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

The report further noted that international petroleum product pricing remains volatile due to global geopolitical and economic factors, such as events in the Middle East, market dynamics in China, seasonal variations, and fluctuations in global production. Despite this, the foreign exchange rate has remained relatively stable, with minimal fluctuations observed in recent periods. These factors, MEMAN explained, are likely to continue impacting landing costs, which could change multiple times within a single day.

Oil marketers have indicated that they may consider importing petroleum products should the current domestic market situation persist for an extended period. Under the current deregulation regime, the prices of petroleum products are determined by market forces.

In an interview with Vanguard, Dr. Billy Harry, the National President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), emphasized that his members have agreed to prioritize the 650,000 bpd Dangote Petroleum Refinery for their sourcing needs.