Why Rising Global Oil Prices Are Making Fuel Costlier in Nigeria
Fuel prices in Nigeria are shaped by global oil markets as well as local policy. Brent crude has risen to about $106 per barrel following disruption around the Strait of Hormuz. When global crude prices rise, the cost of producing petrol also rises. Nigerian crude is light and low in sulphur, so it often sells above Brent. Dangote Refinery needs about 13 crude cargoes monthly but reportedly receives only five to seven from NNPC. The remaining supply is bought at international prices in dollars, sometimes far above the Brent benchmark. Even crude paid for in naira is priced against the dollar-based global market. NNPC cannot simply sell all crude locally at a cheaper rate because much of Nigeria's production is committed under joint-venture contracts. Selling crude below international prices would also reduce government revenue and effectively create a subsidy. Refining, haulage and distribution costs also affect pump prices. This means that when conflicts or supply disruptions push up global oil prices, Nigerian motorists, transport operators and businesses eventually feel the impact.
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