Marketers of refined petroleum products say petrol and diesel prices may drop as crude oil prices slump again.
However, the marketers said the drop may not be immediate, noting it has to do with the stability of the new low prices.
Crude prices tumbled below $60 per barrel over the weekend. The prices hovered around $65 as of Friday.
However, on Monday, the benchmark Brent was trading at $59.80 per barrel, while the West Texas Intermediate traded around $56.71 a barrel, according to oilprice.com
Nigeria’s Brass River and Qua Iboe stood at $64.60 per barrel. The prices were over $10 below the proposed $75 in the 2025 budget revenue projection. This has also triggered fears about the feasibility of the 2025 budget.
As the fall in crude prices impacts the Federal government’s revenue negatively, Nigerians are hopeful that this may translate to cheaper fuel at the pumps. Crude oil prices and the foreign exchange rate are the major determinants of refined product prices.
The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, said oil speculators will look at the cause of the price crash and how stable it will be.
“The price of petrol may come down, but it might not be soon. Oil speculators will look at the stability first and the factors that brought the price down. So, if the factors are natural, they will not look at bringing down the price. If it is an artificial factor that can definitely be ratified, they will also leave it and watch.
“So, I think for now, to enjoy stability, they will look at it and leave it this way. Maybe by the next two weeks, if it continues like this, there will be a reduction in refined petroleum products,” Ukadike stated.
Similarly, the President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, explained that some refineries had bought crude before the prices went down.
“Some of these things are the input values that should be able to create a low and high, but it doesn’t take just that same speed to impact the system because there’s always crude feed that has been there before, either it’s a higher price or a lower price.
“But if it’s a lower price, sometimes it’s easy to think it’s better to increase the price now so that you can have money to buy more crude. But the projection will always be that once there is a price fluctuation, it will naturally affect the input cost, and therefore also affect the output prices that will be sold from the retail outlets. So, we should expect such a response.
“But it will not be as fast as Nigeria expects it to be. There are still processes that it will go through,” Gillis-Harry stated.
According to Reuters, oil prices fell by more than $1 a barrel on Monday after OPEC+ decided to accelerate its output hikes, causing concerns about more supply coming into a market clouded by an uncertain demand outlook.
The contracts opened on Monday at their lowest levels since April 9.
Reuters said those moves compounded losses after Brent shed 8.3 per cent and WTI lost 7.5 per cent last week on rising supply concerns after Saudi Arabia signaled it could cope with a prolonged lower price environment.
That offset optimism on the demand side that US-China tariff talks could occur, Saxo Bank analyst Ole Hansen said.
OPEC+ agreed on Saturday to further speed up oil production hikes for a second consecutive month, raising output in June by 411,000 barrels per day.
The June increase by eight participants in the OPEC+ group, which includes non-OPEC member allies like Russia, will take the total combined hikes for April, May, and June to 960,000 bpd, representing a 44 per cent unwinding of the 2.2 million bpd of various cuts agreed on since 2022, according to Reuters calculations.
* Agency Report