The price of Premium Motor Spirit (PMS), commonly known as petrol, may continue to decline if global crude oil prices keep falling.
The trend is also supported by the relative stability of the naira against the dollar in the foreign exchange market.
According to The PUNCH, crude oil prices dropped by about 2% to a 12-week low recently, with Brent crude settling at $71.62 per barrel, a $1.19 (1.6%) decline.
Similarly, the United States West Texas Intermediate (WTI) crude fell by $1.39 (2%) to $68.37 per barrel. These are the lowest closing prices for Brent since December 6 and for WTI since December 9.
Reports indicate that the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, including Russia (OPEC+), have decided to proceed with a planned oil output increase in April, further influencing market prices.
The falling crude oil prices have triggered fuel price reductions in Nigeria’s downstream sector. Recently, the Dangote Refinery slashed its ex-depot price for petrol from N890 per litre to N825.
In response, the Nigerian National Petroleum Company Limited (NNPCL) matched this price, igniting what analysts have termed a “price war” in the petroleum market.
Economist Paul Alaje believes the price cut is sustainable and predicts that petrol prices could fall below N700 per litre if current market conditions persist. However, he warns that a global crisis causing crude oil prices to rise could alter this trajectory.
“It is possible to bring petrol prices down to N700 based on today’s exchange rate. The only challenge will be if crude oil prices increase due to unforeseen global events,” Alaje said in an interview on Channels Television.
According to Alaje’s calculations, PMS should currently be priced between N795 and N820 per litre.
The National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, has reiterated that petrol prices will continue to fluctuate in response to foreign exchange rates and international crude oil prices.
While lower crude oil prices offer relief to Nigerian consumers, the current price is below the $74 per barrel benchmark set by the Federal Government in the 2025 budget. If the trend continues, motorists and businesses may see further reductions in fuel costs in the coming months.
