Petrol and diesel prices have started to decline as global crude oil prices retreat following the de-escalation of tensions in the Middle East. The reductions, led by the Dangote Petroleum Refinery and followed by some private depot operators, have raised expectations of further cuts in fuel prices, although marketers say the adjustments will be gradual to prevent heavy losses on existing stock.
The Independent Petroleum Marketers Association of Nigeria stated that the Dangote Petroleum Refinery will not embark on sudden fuel price cuts to prevent marketers from incurring heavy losses.
Even as oil prices continue to decline following the de-escalation of tensions in the Middle East, IPMAN said the refinery would rather adopt what it described as systematic price adjustments instead of drastic reductions.
Following the drop in crude oil prices from a high of $120 per barrel during the United States-Iran conflict to about $78 after a peace deal was reached on Sunday, the Dangote refinery reduced its petrol gantry price by N75 per litre. The refinery had raised the price from N830 to over N1,300 per litre during the crisis.
The refinery also reduced the prices of diesel and aviation fuel by N100 per litre each, citing the easing of tensions in the Middle East. However, many Nigerians argued that the reductions did not reflect the sharp decline in crude oil prices.
Speaking in an interview, IPMAN spokesman, Chinedu Ukadike, said the refinery understands the implications of a sudden price crash on fuel marketers.
“The reduction will be systematic. If Dangote does that reduction holistically, it will certainly affect some people who have products, and they might not be able to sell the products. This will cost marketers huge losses.
“Systematically, normalcy will return in a gradual way, and Dangote’s fuel price will reflect the new cost of crude oil in the international market. The refinery will look at its cost of refining and determine a fair price for all,” Ukadike said, urging Nigerians to exercise patience.
On the planned reopening of the Strait of Hormuz, Ukadike said the fuel market was already entering what he described as a descending phase, with marketers becoming more cautious about taking fresh stock.
“With the plan to reopen the Strait of Hormuz, the sector is now on a descending frequency. Prices will be coming down in the next couple of weeks. So, marketers will also be careful while taking new stocks,” he said.
A source within the Dangote Group told our correspondent that the refinery was still observing market developments while processing crude purchased during the crisis period. The source said those criticising the refinery for not cutting prices more aggressively may not fully understand the dynamics of the oil business.
“Crude prices are still swinging. People making such comments are either insincere or they don’t know the business. Let them go and check the prices all over Africa or the world,” the source said, adding that prices could still drop to as low as N900 per litre, “but we still have the expensive crude in our tanks”.
As crude prices continued to fall following the peace agreement between the United States and Iran, the Dangote Petroleum Refinery cut its petrol gantry price by N75 per litre, from N1,250 to N1,175.
The reduction prompted some private depot operators to lower their prices to around N1,180 per litre on Tuesday, according to Petroleumprice.ng.
Checks by our correspondent on Wednesday showed that many filling stations had yet to adjust their pump prices, with several still selling petrol at about N1,280 per litre. Marketers attributed the delay to the need to clear existing stock purchased at higher prices.
However, some filling stations reduced pump prices by about N10 per litre following Dangote’s latest adjustment. Marketers said further reductions from suppliers and retailers could emerge between the weekend and next week.
Meanwhile, the Dangote refinery also lowered its gantry prices for diesel and aviation fuel on Wednesday. According to data from Petroleumprice.ng, the refinery reduced the diesel gantry price by N100 per litre, from N1,700 to N1,600, while aviation fuel was cut by the same margin, from N1,550 to N1,450 per litre.
The reductions came hours after the refinery announced the N75 reduction in the petrol gantry price from N1,250 to N1,175 per litre. The price adjustments were linked to the decline in crude oil prices following the easing of tensions in the Middle East.
It was gathered that private depot operators had also begun lowering prices to remain competitive with the Dangote refinery. According to Petroleumprice.ng, Rainoil reduced its aviation fuel price from N1,553 per litre to N1,550 per litre on Monday. Similarly, the average diesel closing price across Lagos depots, including African Terminal, Sahara, Ibeto and Duport, stood at N1,660 per litre on Tuesday.