Global oil prices have fallen to levels last seen before the US-Iran war, raising expectations among consumers and businesses for a corresponding reduction in the price of petrol, Daily Trust can report.
However, pump prices across Nigeria have largely remained unchanged, prompting concerns over the pace at which global market gains are being transmitted to domestic consumers.
Brent crude, the international benchmark for oil prices, has retreated sharply from the highs recorded during the peak of the war on Iran by the US and Israel which raised geopolitical tensions in the Middle East and triggered the closure of the Strait of Hormuz, the waterway controlling one-fifth of global oil supply.
The decline followed easing concerns over disruptions to global oil supply routes and improved market confidence that major oil-producing nations will maintain adequate output levels.
While the oil prices have continued to drop since the US-Iran signed a peace agreement, the price of premium motor spirit (PMS) in Nigeria has only dropped by N75.
But on Wednesday, the crude prices dropped further almost to the pre-war levels.
Checks by Daily Trust indicated that Brent Crude dropped to $73.14 per barrel while WTI-the US variant dropped to $69.85.
A litre of PMS was sold between N770 and N800 per litre before the US-Iran hostilities broke out but currently a litre is sold at between N1,200 and N1,300 per litre, depending on the location.
While Nigerians expected the fall in crude prices to ordinarily create room for lower refined petroleum product costs, retail petrol prices in Nigeria have continued to hover around the existing level.
Analysts maintain that if current market conditions persist and the naira remains relatively stable, pressure will mount on marketers to review pump prices downward in the weeks ahead.
A marketer who spoke to our correspondent insisted that the ex-depot price should not be more than N700 per litre as against the current N1,180.
An Oil and gas analyst, Dr. Ayodele Oni, had told our correspondent that the fall might not immediately translate to reduced pump prices.
“For the ordinary Nigerian, the honest answer is that even if crude falls back, pump prices are unlikely to follow it all the way down.
“Our market is deregulated, and the binding factor is no longer Brent or crude prices alone, but the exchange rate, since landed petrol cost is priced in dollars. That matters for the cost of living, because petrol feeds directly into transport and food prices: relief at the pump only reaches the market and the dinner table if the naira holds firm while crude eases. Lower crude is necessary, but on its own it is not enough. The naira does much of the heavy lifting. The alternative is local crude pricing which is not reflective of the international crude prices or FX.”