Hopes Rise for Cheaper Petrol After US, Iran Move to Reopen Strait of Hormuz
- Global crude prices fell sharply, with Brent dropping over 5% as optimism grew over a possible reopening of the Strait of Hormuz
- The United States and Iran are currently in diplomatic talks, hoping to reach an agreement
- Depot petrol prices currently average N1,277 to N1,290 per litre across Lagos, Warri, Port Harcourt and Calabar
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Petrol prices in Nigeria could fall in the coming weeks over expectations that the Strait of Hormuz may reopen as diplomatic talks between the United States and Iran move forward.
Already, the international benchmark for crude oil price Brent dropped by 5.19% to $98.17 per barrel on Monday, May 25, with West Texas Intermediate down 5.54% to $91.25, according to Oilprice.com.
Source: Getty Images
Global crude oil prices
The Strait of Hormuz, one of the world's most vital oil shipping routes handling nearly a fifth of global supply, has been a focal point of regional tension. Any decline in risk around the waterway usually means a lower "risk premium" in the price of crude oil.
BBC reports that Saul Kavonic, head of energy research at MST Financial, said:
"There is now some light at the end of the tunnel, which will bring some near term oil price relief.
"But even in the most optimistic scenario from here, oil markets will remain tight through 2027 given the time required to normalise oil flows through the Strait, repair damaged oil facilities, and rebuild global oil stocks that have seen record depletion since the war began."
Depot petrol price changes
Despite the drop in prices of global crude oil, depot prices remained varied.
In Lagos, Automotive Gas Oil (AGO) traded around N1,802 per litre on Friday, while Premium Motor Spirit (PMS) was sold at N1,277 per litre, according to traders.
The price of petrol in Warri was an average of N1,285 per litre, while AGO was sold at about N1,805 per litre. At the depots in Port Harcourt, AGO traded at about N1,810 per litre, while PMS at the depots in Calabar was priced at about N1,290 per litre.
According to traders, price differentials in various regions reflect transport and logistics costs as well as differing supply levels at different depots.
If crude prices continue to ease, pump prices could see a downward review, market analysts said, conditional on a stable exchange rate and better supply dynamics, and it will also take time.
Source: Getty Images
A Lagos-based fuel importer said:
"Cargoes in the system were purchased at high costs, so the adjustments would occur gradually."
Nigeria's fuel prices remain sensitive to global crude market conditions, currency exchange rates, and import costs, even with increased refining capacity in the country after the completion of Dangote Refinery and other refineries.
NNPC petrol prices drop
Earlier, Legit.ng reported that Nigerian National Petroleum Company Limited (NNPCL) have emerged at some Nigerian National Petroleum Company Limited (NNPC) retail outlets in Lagos as marketers adjust to lower ex-depot rates across key fuel supply hubs.
Checks at both NNPC filling stations at Egbeda and Ipaja indicated that they have both reviewed most of the pumps downwards and they are being sold at prices ranging from N1,300 to N1,315per litre ( below the N1,320 official price ).
Source: Legit.ng
