The prices of refined petroleum products, including diesel, are expected to rise in the coming days due to an increase in the cost of Brent crude, the global benchmark for crude oil. On Sunday, Brent crude reached $79.76 per barrel, up from $72.88 in December 2024. This price surge is projected to impact fuel costs across Nigerian depots significantly.

Factors Driving the Increase in Brent Prices

The rise in Brent crude prices has been attributed to a combination of geopolitical tensions, particularly the ongoing sanctions on Russian oil exports, and supply concerns. Seasonal demand fluctuations in colder regions have further exacerbated the upward trend.

Industry analysts suggest that this increase in Brent crude prices will directly influence the cost of refined petroleum products, as many Nigerian depot owners rely on imports to meet demand. The correlation between crude oil prices and the prices of refined products is well-established, with Brent crude serving as a benchmark for global petroleum pricing.

Price Hikes Already Observed at Depots

Several fuel depots in Nigeria reported noticeable price increases for diesel on Friday. For instance:

• The Nipco depot in Lagos raised its price by ₦70, increasing from ₦1,050 to ₦1,120 per litre.
• The Prudent depot also recorded an increase, closing the week at ₦1,045 per litre, up from an earlier ₦1,025.

The Federal Government’s benchmark oil price in the 2025 budget is $75 per barrel, indicating that the current Brent price of $79.76 has already surpassed budgeted expectations.

Implications for Fuel Prices in Nigeria

Olatide Jeremiah, Chief Executive Officer of petroleumprice.ng, noted that depot owners are likely to adjust their loading prices for refined petroleum products starting Monday. He explained, “As Brent crude approaches $80, it is inevitable that importers will pass on the increased procurement and shipping costs to depot owners, which will eventually trickle down to end consumers.”

Jeremiah emphasized that the majority of Nigerian oil marketers rely on imports, making them vulnerable to fluctuations in global crude prices. As a result, there is a high likelihood of increased diesel prices and possibly other petroleum products.

Broader Economic Impacts

The anticipated rise in fuel prices could have significant economic implications for Nigeria:

1. Increased Transportation Costs: Higher diesel prices are likely to drive up transportation and logistics costs, affecting businesses and consumers across various sectors.
2. Inflationary Pressures: With transportation costs being a key driver of inflation, the increased cost of diesel could contribute to a rise in the overall cost of goods and services.
3. Strain on Businesses: Industries reliant on diesel, such as manufacturing and logistics, may face higher operational costs, potentially leading to price adjustments for their products.
4. Household Impact: The increase in fuel prices may lead to higher energy costs for households, particularly those relying on diesel-powered generators for electricity.

Expert Outlook

Industry observers warn that further increases in Brent crude prices could exacerbate the situation. The global oil market remains volatile, with geopolitical developments and seasonal demand fluctuations likely to influence pricing trends. The government and industry stakeholders may need to explore measures to mitigate the impact on consumers and businesses.

Calls for Strategic Intervention

Economic experts and stakeholders have urged the Federal Government to explore strategies to cushion the impact of rising fuel prices on Nigerians. Suggested measures include:

• Expanding Local Refining Capacity: Strengthening domestic refining capabilities could reduce reliance on imports and shield the local market from global price fluctuations.
• Providing Subsidies: Short-term subsidies for critical sectors could help stabilize prices and prevent inflationary pressures.
• Enhancing Transparency: Clear communication about price adjustments and the factors driving them could help manage public expectations and reduce speculation.

As the new week begins, all eyes will be on depot owners and oil marketers to see how the increase in Brent crude prices will shape fuel costs across Nigeria. For consumers, the developments underscore the need for caution and strategic planning to navigate potential price increases.