Fuel price to rise further as oil hits $95.70 per barrel

• Subsidy rise to more than N160 per litre
• Oil traders said refiners would pass the high price of oil to fuel importers

The continued rise in the price of crude oil to $95.70 per barrel, Monday, from $94 per barrel weekend, in addition to inflation and depreciation of the Naira have culminated in the price of imported fuel rising in the global market.

The latest report obtained from the Organisation of Petroleum Exporting Countries, OPEC, indicated that the price of OPEC Basket made up of Bonny Light (Nigeria), Saharan Blend (Algeria), Girassol (Angola), Djeno (Congo), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basrah Medium (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela) has risen further to $95.70 per barrel, from $94, yesterday.

Oil traders said refiners would pass the high price of oil to fuel importers, including Nigeria which imports 100 per cent of its petrol from the global market.

But new imports would require more Naira, currently going for N950/United States dollar as the shortage of the dollar continues to impact the nation’s economy.

The National Operations Controller of Independent Petroleum Marketers Association of Nigeria, IPMAN, Mike Osatuyi, could not be reached for comments.

However, an authoritative industry source, who pleaded anonymity, said: “The price of crude oil continues to rise in the international market. At N950/$, foreign exchange is a major problem that can push landing cost to more than N600 per litre, from over N500 per litre. Also, fuel subsidy has risen to more than N160 per litre, from the previous N150 per litre. The market is haunted by instability. This is why oil marketers have not been able to import the product, several months after the deregulation of the market.”

In August 2023, Vanguard reported that the rise in crude oil prices by 7.5 per cent to $85.89 per barrel in August 2023, from $79.92 per barrel in July 2023, depreciation of the Naira to N775/dollar in the official market and inflation, currently standing at 22.79 per cent, combined to increase the landing cost of petrol to N600 per litre in the domestic market.

The landing cost excludes additional costs, including depot-related charges, transportation and marketers’ margin, which would combine to bring delivery at filling stations to more than N700/litre.

Sources around oil marketers had told Vanguard then that the landing cost for September 2023 is expected to rise further as the factors that propelled the rise in August figures have worsened.

In her email response to Vanguard inquiries, the Business Development Manager, West Africa, Funmi Bashorun, stated: “Indeed, high crude prices and continuous depreciation of the Naira pose as deterrents to the effectiveness of the deregulation and active participation by more marketers.”

However, while NNPC Limited and major marketers continue to sell the product at N568 per litre, their independent counterparts retail at high prices, ranging between N570 and N700 per litre in different parts of the nation, depending on location.