As petrol prices jumped to about N1,300 per litre in various parts of Nigeria on Monday, businesses across the country are beginning to prepare for a sharp rise in their operational costs.
This was confirmed by economists and the Organised Private Sector, who warned that the hike could fuel inflationary pressures, affecting goods and services, while companies scramble to adjust budgets and pricing strategies to cushion the impact on consumers.
As a fallout of the ongoing US-Iran war, a litre of Premium Motor Spirit (petrol) rose to about N1,300 per litre in most filling stations nationwide on Monday after the Dangote Petroleum Refinery hiked its gantry price from N995 to N1,175 a litre, sparking fears of a fresh rise in inflation among members of the Organised Private Sector.
Some filling stations also sold a litre for N1,250, N1,350 and N1,400 respectively.
This was even as the Nigeria Labour Congress slammed Dangote refinery’s repeated petrol price hikes, while there were reports on Monday that the G7 nations were planning to wade into the crisis by probably releasing emergency oil reserves.
The PUNCH reports that Dangote’s N1,175 per litre petrol price on Monday marked the third upward adjustment within a week. This was as the price of crude hit about $115 per barrel before crashing to $98 later in the evening.
The latest price revision comes hours after The PUNCH projected that petrol prices could rise for the third time within a week following the temporary suspension of petrol sales at the refinery on Sunday.
The refinery announced the price hike to marketers on Monday, raising the gantry price of PMS to N1,175 per litre from N995 per litre announced on Friday, representing an increase of N180, or about 18.1 per cent, within three days. It also jerked up the gantry price of diesel to N1,620.
A senior official of the refinery, who spoke on condition of anonymity because he was not authorised to comment publicly, confirmed the adjustment to one of our correspondents, stating that the revision had already been communicated to marketers and depot operators.
“Yes, the gantry prices have been adjusted. PMS is now N1,175 per litre while Automotive Gas Oil (diesel) is N1,620 per litre,” the official said. “The market has been extremely volatile, and replacement costs have shifted significantly in recent days. These adjustments reflect prevailing market fundamentals and the cost environment we are currently operating in.”
Checks on the industry pricing platform petroleumprice.ng showed that the revised rates had already been updated across petroleum depot pricing systems, indicating a shift in the benchmark price used by downstream marketers.
In a swift response, filling stations wasted no time in adjusting their pump prices from around N1,060 to N1,250. Our correspondents report that the Dangote-backed MRS filling in Olowotedo led the charge, raising the petrol price to N1,250. The NIPCO filling station in the area sold petrol at N1,200 as of Monday afternoon.
In Abuja, several filling stations along Airport Road adjusted their pump prices following the latest petrol price increase. Shafa and AA Rano sold petrol at N1,092 per litre, while Shema dispensed the product at N1,100 per litre in the morning. Optima recorded the highest price on the corridor at N1,270 per litre, while Matrix sold petrol at N1,092 per litre.
Dangote defends action
In an update on its X handle, the Dangote Group defended the price increase. Managing Director/CEO of the Dangote Petroleum Refinery, David Bird, said the refinery will continue to meet Nigeria’s fuel demand despite global supply disruptions and market volatility, adding that domestic refining gives Nigeria supply security, ensuring the country avoids fuel shortages and queues even when global markets are disrupted.
According to Bird, even under the crude-for-naira arrangement, Nigerian crude is purchased at international benchmark prices, meaning the refinery does not receive discounted crude. He said import-dependent countries are worst hit as the global oil crisis escalates.
“Global oil markets are experiencing extreme volatility, with crude prices rising from the mid-$60 range to nearly $120 per barrel within a week. The refinery is fully exposed to international commodity markets, including crude oil prices, freight rates, insurance, and financing costs. Freight costs have surged dramatically, with tanker costs rising from about $800,000 to roughly $3.5m per shipment in the current market environment,” he explained.
The MD added that the Dangote refinery operates at its full nameplate capacity of about 650,000 barrels per day, with the potential to increase production to around 700,000 barrels per day.
Speaking on the development, the Independent Petroleum Marketers Association of Nigeria said the surge is temporary, as prices will normalise immediately the war ends. “The price of fuel would come down once Brent crude comes down immediately after the war,” IPMAN spokesman Chinedu Ukadike said.
According to Ukadike, Pinnacle Oil was selling petrol to marketers at N1,200. Some others, like Fynefield, sold it at N1,230, according to petroleumprice.com. “Filling stations are only adjusting the pump prices based on what we buy from the depots or Dangote refinery,” Ukadike said.
The spokesman of the Crude Oil Refineries Association of Nigeria, Eche Idoko, said there is little the government or anybody could do to help the surge in fuel prices, saying Nigerians would have to endure it until other oil-producing countries think of an alternative.
Idoko also noted that there would be relief the moment the Middle East crisis abates
Inflation looms
Members of the Organised Private Sector warned that the increase in petrol prices could trigger higher transport and food prices, urging the Federal Government to strengthen efforts to boost local refining capacity.
In separate interviews with The PUNCH, business group leaders, including the Director-General of the Lagos Chamber of Commerce and Industry, Dr Chinyere Almona, said the hike in pump prices had already begun to affect logistics costs across the economy.
“We are already seeing increases in fuel pump prices, and this is likely to impact transport and food prices as it relates to food distribution logistics,” Almona said.
She added that the ongoing crisis in the Middle East could worsen the situation by disrupting global freight and pushing up the cost of imported goods. “The crisis in the Middle East is also affecting global freight logistics, which may also mean a higher cost of shipments and eventually transferred costs on imported goods,” Almona said.
The LCCI DG noted that the development could reverse recent progress recorded in moderating inflation, especially as the country approaches another election cycle.
“We just celebrated the rate cut by the CBN, seeing a continuous declaration of our inflation rates in recent months. With electioneering activities around the corner and the unfortunate impact of the crises in the Middle East, the Nigerian economy may well be on its way to experiencing some inflationary pressures that must be carefully managed to avert recording negative economic indicators,” she noted.
Almona urged the government to prioritise investments that would strengthen domestic industrial capacity, particularly in refining crude oil locally.
“We advise that we must ramp up local manufacturing and local refining capacity to beat these unforeseen global shocks that are mostly beyond our control. At this time, we urge the government to deepen its commitment to boosting local refining of our crude to meet local demand, away from importing refined petrol,” Almona stressed.
She added that Nigeria could benefit from rising crude oil prices in the international market if the government channels additional revenues into productive investments.
“With the Middle East crises pushing crude prices up, Nigeria stands to benefit from the higher prices of crude in the international oil markets. With increased revenue expected, the government should consider investing more in infrastructure that boosts local manufacturing, refining, and mining capacities to make us self-sufficient in some critical consumer products,” Almona said.
Also speaking, the Director-General of the Nigeria Employers’ Consultative Association, Adewale Oyerinde, warned that sustained geopolitical tensions in the Middle East could worsen inflationary pressures in Nigeria through higher fuel costs.
He said rising energy prices typically affect transportation and logistics, which ultimately drive up the prices of goods and services.
“Given the close link between energy costs, transportation, and the prices of goods, particularly agricultural produce, such developments could further exacerbate inflationary pressures, especially food inflation,” Oyerinde said.
The NECA DG affirmed that higher fuel prices raise the cost of production and distribution for businesses, with the burden often passed on to consumers.
“Higher energy costs increase the cost of logistics, production, and distribution across key sectors of the economy, including agriculture and manufacturing. As businesses contend with escalating operational expenses, these costs are often transferred to consumers through higher prices of goods and services, thereby deepening inflationary trends and weakening purchasing power,” Oyerinde said.
He, however, noted that the emergence of local refining capacity could help mitigate the impact of global oil price volatility if supported by the right policies.
“While acknowledging the positive prospects presented by local refining, particularly the operations of the Dangote Refinery, the full benefits will depend on efficient supply chains, transparent pricing mechanisms, and supportive government policies,” Oyerinde said.
On his part, the President of the Association of Small Business Owners of Nigeria, Dr Femi Egbesola, warned that the increase in petrol prices would likely raise the cost of transportation, manufacturing, and logistics.
“Energy, particularly petrol and diesel, has always been one of the major drivers of inflation because it is used across virtually all sectors, from manufacturing to transportation and logistics. Whenever there is a hike in fuel price, naturally it will push up inflation, and now that we are having this particular hike, we should also expect that prices of food and commodities will naturally go up,” Egbesola said.
He added that the increase had now become significant enough to affect businesses and households. “You will remember that this hike has been going on for about a month or more now, coming up gradually. Initially, it looked insignificant, but now it is becoming very significant. The increase is becoming very significant,” he said.
Egbesola said the development would eventually lead to higher production and distribution costs, which would be reflected in consumer prices. “We should begin to expect that the cost of transportation will begin to go up; the cost of production and manufacturing will also begin to go up. And when that happens, it ends up with the cost of products and services also going up,” he said.
The ASBON chief called on the government to strengthen support for domestic refineries so that global shocks would have less impact on the local economy.
“I think what we need to do, particularly now that the government has licensed many more refineries, is for the government to give all those refineries the kind of backing that they are going to such that international chaos and international economic shocks will not be affecting us directly. Being a producer of crude oil, we shouldn’t be affected that much,” Egbesola said.
NLC tackles Dangote
Reacting, the Nigeria Labour Congress argued that the spike in petrol prices following tensions in the Middle East has exposed weaknesses in Nigeria’s downstream petroleum sector, particularly regarding domestic refining capacity, saying the development casts doubt on claims that the Dangote refinery can fully meet Nigeria’s fuel demand.
“The crisis in the Middle East has brought into question many of Dangote’s claims about meeting the country’s demand for refined petroleum products,” Assistant General Secretary of the NLC, Christopher Onyeka, told our correspondent.
He noted that as international developments continue to influence petrol prices in Nigeria, it shows the country’s continued dependence on imported products, whether crude oil or refined fuel.
“If we were truly refining domestically, global events should not have such a strong impact on local petrol prices. The reality is that Nigeria still relies on imported refined fuel,” he said.
Onyeka added that available information suggests domestic refining output remains far below national demand. He argued that rising global crude prices have pushed up the cost of imported refined products, increasing the burden on consumers.
“The global crude price surge is passed on to countries like Nigeria that import refined fuel, leading to higher costs for consumers,” Onyeka stated.
He added that Nigerians are now paying more than N200 extra per litre due to the Middle East crisis, underlining the country’s exposure to global oil shocks. “This situation shows the urgent need for transparency and a deeper investigation into Nigeria’s downstream petroleum sector,” he stated.
Meanwhile, small and medium enterprises in Nigeria are facing growing challenges as unstable electricity and rising fuel costs threaten production and profitability, the National Vice-President of the National Association of Small and Medium Enterprises, Southwest, Solomon Aderoju, told The PUNCH.
“The ongoing conflicts in Iran and between Israel and the US have pushed fuel prices up in Nigeria. This increases raw material costs, reduces consumer purchasing power, and disrupts supply chains,” he explained. He warned that these challenges are affecting MSMEs across the Southwest.
Economists react
An economist, Aliyu Ilias, said rising global oil prices, which should benefit an oil-producing country like Nigeria, may instead worsen inflation because the country lacks domestic mechanisms to cushion the impact.
“Ideally, rising oil prices should be a blessing for Nigeria, but the reverse is true because we lack sufficient internal shock absorbers. We do not produce most of what we consume and cannot rely on domestic pricing mechanisms to stabilise costs,” he said.
He noted that increases in global crude prices quickly translate into higher petrol prices in Nigeria, raising the cost of goods and services. “Once the oil price rises, the pump price of petrol increases, and the cost of other petroleum products follows. This negatively affects transportation and the prices of goods and services,” he said.
Ilias said the current petrol price of around N1,250 per litre is already impacting product costs and could fuel further inflation. He warned that Nigeria’s failure to achieve sufficient domestic refining capacity continues to expose the country to external shocks in global oil markets.
“It is saddening that our refineries are still not producing enough domestically. Even if the government plans to sell national energy assets, it should do so on time to meet the country’s energy needs,” Ilias said.
He added that while the government may benefit from higher oil revenues, ordinary Nigerians bear the cost through rising fuel and commodity prices.
A former Zenith Bank chief economist, Marcel Okeke, said rising fuel prices quickly translate into higher inflation, especially via transportation costs. “Transport fares are usually the first to adjust with petrol price hikes, creating ripple effects across the economy,” he revealed.
Okeke noted that once transport costs rise, other prices follow, saying, “When transportation costs increase, the prices of food, rent, logistics, and services also rise.” He emphasised that rising fuel prices inevitably drive inflation, regardless of government interventions.
Okeke added that Nigeria’s status as an oil-producing country does not shield it from global oil price shocks, since the country still relies partly on imported refined products. “Nigeria produces crude oil, but the question is whether domestic refineries get enough local crude to meet demand,” he said.
He noted structural issues, including prior crude supply commitments under forward sales agreements, which constrain local refineries. “When combined, these factors mean Nigeria is not immune to global oil market developments, including tensions in the Middle East,” he said.
Emergency crude release
G7 nations said on Monday that they are ready to take “necessary measures” to support the global supply of energy after the US-Israel war with Iran sent oil prices surging. However, a meeting of G7 finance ministers and the International Energy Agency ended without an agreement to release strategic crude reserves.
The oil price reached nearly $120 a barrel on Monday over fears of a lengthy disruption to supplies, leading to global stock markets falling. But it later went down to $98 when the G7 mulled the release of crude.
According to the BBC, at a virtual meeting, the option of releasing oil from stockpiles was one of several discussed, as the head of the IEA, Fatih Birol, said global oil markets “have deteriorated in recent days”.
Birol said, “In addition to the challenges of transit through the Strait of Hormuz, a substantial amount of oil production has been curtailed. This is creating significant and growing risks for the market.
“IEA member countries currently hold over 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government obligation.”
Following the meeting, French finance minister Roland Lescure said, “We are not there yet,” on the question of whether emergency stocks will be released. If reserves are released, it would be the first time since 2022, following Russia’s full-scale invasion of Ukraine.
In a statement following the meeting, the G7 said, “We stand ready to take necessary measures, including to support the global supply of energy, such as stockpile release.”
About a fifth of the world’s oil supply is usually shipped through the Strait of Hormuz. But traffic through the narrow passage has all halted since the war started more than a week ago.
Meanwhile, the Petroleum Products Retail Outlets Owners Association of Nigeria has tasked the Nigerian National Petroleum Company Limited to urgently strengthen domestic refining capacity as a strategic step to shield Nigeria from global petroleum market shocks.
PETROAN specifically called on the Group Chief Executive Officer, Bayo Ojulari, to facilitate the immediate commencement of production at Nigeria’s local refineries, particularly the Area 5 Plant at Port Harcourt Refinery and the Warri Refinery, both of which previously operated briefly before shutdown for profit index evaluation.
The National President of PETROAN, Billy Gillis-Harry, said the ongoing conflict involving Israel, the United States, and Iran is pushing global petroleum prices to alarming levels. He noted that with no clear end to the conflict, petroleum product prices in both international and domestic markets are expected to rise sharply in the coming days.
Projecting future trends, he warned that PMS could rise close to N2,000 per litre while diesel may approach N3,000 per litre if the situation persists.
