KEY POINTS
- Petrol landing cost now goes down to N970 from N971 in November.
- Crude oil price drops to $73.77 per barrel and makes petrol more expensive.
- MEMAN said forex rates are volatile and global petroleum pricing.
The Major Energy Marketers Association of Nigeria (MEMAN) said the landing cost of Premium Motor Spirit (PMS), commonly known as petrol, decreased to N970 per litre in December 2024.
The N971 per litre this posted in November 2024 represents marginal reduction in the previous pricing.
The price decline is closely tied to the dip in crude oil prices from US$74 per barrel to US$73.77 per barrel in the previous week.
According to MEMAN’s daily energy bulletin as at May 31, the landing costs are provided at an exchange rate of N1,533.57/$ and a crude oil price of $73.91 per barrel (Brent).
But MEMAN cautioned that the volatile international petroleum product market was still beset by a number of geopolitical and economic factors. Events in the Middle East, swings in China’s economy, and the influence of the most recent U.S. elections are causing volatility. These factors, along with foreign exchange fluctuations, are also affecting petrol landing costs.
The stability of fuel price dictated by market forces in determining pump price
Even though petrol landing costs marginally fell from N1,000.46 per litre to N990.07 per litre, petrol retail price is N1,025 per litre in Lagos.
But Chairman, Lagos State Chapter, of MEMAN, Ehimen Joseph, said that a deregulated market regime determines the price of petrol in the market place. But price cuts are possible, depending upon the swings in the overall oil market, he said.
According to Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), he maintains that such reduction would not happen immediately. Markets have huge stocks of petrol and the price cannot just drop spontaneously,” he said. There will be no reduction until till it’s finished, Yusuf explained.
While market forces and FX volatility can cause prices to go down over time he acknowledged, there’s usually a lag. It takes one to two months for any marks to deplete existing stocks before that price drop could take effect.
Petrol prices are still uncertain because global oil markets are still volatile and currencies are also volatile. MEMAN and stakeholders are still monitoring the situation in the hope that sustained drops in crude oil prices and a stable forex market will eventually bring some relief to consumers.
