The rise in the cost of crude oil, coupled with the depreciation of the naira against the United States dollar, might lead to a hike in the pump price of Premium Motor Spirit, popularly called petrol.
Brent crude, the global benchmark for oil, rose to $94/barrel on Sunday, the highest figure in 2023.
Oil had started the year at about $82/barrel, dipped to $70/barrel in June, but traded above $92/barrel in the past week.
Meanwhile, the naira fell further against the dollar the preceding day (Wednesday), after closing at 950/$ at the parallel market.
Although the Federal Government and its Nigerian National Petroleum Company Limited had insisted that subsidy on petrol had ended, following the deregulation of the downstream oil sector, operators insisted on Sunday that the government was implementing quasi-subsidy.
They explained that with the latest rise in crude oil price, the cost of petrol was meant to increase, stressing that if the government insists on leaving the commodity at N617/litre, then subsidy on PMS had been returned quietly.
The marketers explained that in July when the cost of petrol was raised to N617/litre, crude oil traded around $82/barrel, while the exchange rate was not as high as N950/$ at the parallel market.
The Nigerian Association of Road Transport Owners corroborated the concerns of marketers, as it stated that the price cap on petrol had made it tough for marketers to comply with the demands of NARTO with respect to increasing the cost of transportation for petrol.
“The Group Chief Executive Officer of NNPC, in one of his statements, had pointed out that as long as the dollar continues to rise, Nigerians should not expect petroleum products prices to be pegged. The cost of crude oil is also on the rise and it impacts on petrol price, because PMS is derived from crude.
On his part, the President, Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, said though the cost of crude had been rising lately, the NNPCL should be able to manage it for the benefit of Nigerians, with respect to petroleum products prices.
“Crude oil is selling at a higher price and that price should impact positively, because the major importer of petroleum products is the NNPC and they do that on a swap basis, unless they are telling us that the swap is not efficient.