As global oil markets react to deepening trade tensions and weakening demand signals, Brent crude prices have settled at $65 per barrel, maintaining a relatively steady position despite recent volatility. However, in Nigeria, this stability offers little comfort to consumers, as depot prices of Premium Motor Spirit (PMS), a key indicator of future pump prices, show no significant sign of softening.
Industry watchers note that while the global benchmark has dropped from previous highs, the downstream effects on Nigeria’s domestic market remain muted due to structural inefficiencies, supply disruptions, and lingering currency instability.
Global Market Pressures Collide
The current Brent crude level reflects a combination of factors stemming from alternative crude sources such as U.S. WTI and Mediterranean blends. These dynamics have led to diminished appetite for Nigerian grades, resulting in an accumulation of unsold cargoes from the April loading cycle.
According to energy market intelligence firm Argus Media, as many as 15 Nigerian crude cargoes were still seeking buyers heading into the May trading window. The subdued demand has forced Nigeria to offer steeper discounts, which in turn chip away at already fragile revenue expectations.
Domestic Depot Prices Remain Sticky
Despite the global decline in crude oil prices, ex-depot rates in Nigeria, the prices marketers pay to lift fuel from depots, have remained stubbornly high. Current depot prices for PMS from major marketers like Aiteo (₦860.5), Eterna (₦865), A.Y.M Shafa (₦871), and A&E (₦875) reflect this persistent trend.
Industry insiders point to several contributing factors:
- Exchange rate pressures impacting landing costs
- High operational overheads and logistics constraints
- Inadequate refining capacity, with domestic demand still reliant on imports despite growing capacity from new refineries like Dangote’s
Marketers say that the relatively high depot rates are squeezing margins and limiting the ability of retailers to pass any form of savings to consumers.
Budgetary Headwinds and Policy Concerns
The Federal Government’s 2025 budget is pegged at $75 per barrel, a target now looking increasingly optimistic in light of current market realities. With Brent crude hovering at $65 and Nigerian production hovering around 1.4 million barrels per day, far below the 2 mbpd target, revenue projections are now under pressure.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently revealed that crude oil production dropped in March, continuing a downward trend from January highs. Combined with falling crude prices, the fiscal strain is likely to grow, especially given Nigeria’s dependency on oil exports for over 70% of government revenue.
No Immediate Relief in Sight
Depot operators and analysts believe short-term relief on pricing is unlikely, even if Brent crude remains at or below the $65 mark. Until domestic supply chains are optimized and consistent refining output is achieved, fuel prices are expected to remain volatile, detached from the fluctuations seen in the global crude market.
For now, Nigerians continue to feel the squeeze at the pump, with no clear timeline for stabilization, and depot owners bracing for potential government interventions or subsidy debates should volatility intensify.
