The Crude Oil Refinery Owners Association of Nigeria (CORAN) has projected that the pump price of Premium Motor Spirit (PMS), commonly known as petrol, could decrease to below N400 per litre if global crude oil prices continue their downward trend. This optimistic outlook is contingent upon crude oil prices potentially falling to $50 per barrel.
Current Market Dynamics
As of early April 2025, Brent crude, the international oil benchmark, has experienced a significant decline, trading around $65 per barrel. This reduction is attributed to various global economic factors, including trade tensions and shifts in production strategies among oil-producing nations.
Implications for Petrol Pricing in Nigeria
Historically, fluctuations in global crude oil prices have directly influenced the landing cost of refined petroleum products in Nigeria. With the recent dip in crude prices, CORAN asserts that the cost of importing and refining petrol should correspondingly decrease, potentially leading to lower retail prices for consumers. Specifically, they argue that if crude prices stabilize at $50 per barrel, petrol could be sold at approximately N350 per litre.
Challenges and Considerations
Despite the potential for reduced petrol prices, CORAN has expressed concerns that without sustained government interventions, such as the continuation of the naira-for-crude exchange mechanism, the anticipated price reductions may not materialize. The naira-for-crude deal, which allows local refiners to purchase crude oil in the local currency, has been instrumental in stabilizing petrol prices. However, disruptions or discontinuation of this arrangement could negate the benefits of lower crude prices.
Industry Perspectives
The downstream oil sector in Nigeria has witnessed intensified competition, particularly with the emergence of the Dangote Petroleum Refinery. The refinery's strategic pricing decisions have influenced market dynamics, prompting other players, including the Nigerian National Petroleum Corporation (NNPC), to adjust their pricing structures. This competitive environment has the potential to further drive down petrol prices, benefiting consumers.
While the prospect of petrol prices dropping below N400 per litre offers a hopeful outlook for Nigerian consumers, realizing this potential is contingent upon multiple factors. Sustained low global crude oil prices, supportive government policies, and a competitive refining sector are all critical components that will determine the trajectory of petrol pricing in the country.
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