Brent crude oil prices are approaching $74 per barrel, sparking concerns in Nigeria as a potential depot price hike threatens to deepen economic challenges. As of this morning, Brent crude futures were trading at approximately $73.85 per barrel, down slightly from yesterday’s close of $74.38, according to global oil market data. This comes amid speculation over supply trends and demand forecasts, with Nigeria an OPEC member facing significant domestic repercussions.
The anticipated depot price hike in Nigeria is closely tied to the interplay between global oil prices and local market dynamics. Depot owners, responsible for storing and distributing petroleum products, are considering raising ex-depot prices the rate at which fuel is sold to marketers due to escalating import costs linked to Brent crude benchmarks. Nigeria, despite being Africa’s top oil producer, relies heavily on imported refined petroleum, making it particularly sensitive to international price shifts. A rise in Brent crude directly increases the landing cost of fuel, a burden often transferred to consumers.
Economic Impact on Nigeria
Experts predict that if Brent crude stabilises or exceeds $74 per barrel, the ex-depot price of petrol could jump from its current range of ₦620 to ₦650 per litre to over ₦700 per litre. This follows recent monetary policy tightening by the Central Bank of Nigeria and a volatile naira, which was valued at ₦1,650 to the dollar as of today. With fuel subsidies phased out in 2023, such a price surge could further squeeze household incomes and drive up transportation costs in a nation where public transit options remain limited.
“Nigeria’s economy is on edge,” said Dr. Chinedu Okeke, an energy economist in Abuja. “A Brent crude price near $74 leaves depot operators with little room to manoeuvre. Without swift government action, we could see significant unrest.”
Global Market Dynamics
On the global stage, Brent crude’s price reflects a complex balance. Easing geopolitical tensions in the Middle East have recently tempered fears of supply disruptions, which had previously pushed prices higher. However, the International Energy Agency (IEA) has cautioned that an oil market surplus could emerge in early 2025, driven by OPEC+ spare capacity and softening demand, particularly from China. Despite this outlook, Brent remains volatile, sitting $5 below its weekly high earlier this month.
Nigeria, targeting an OPEC production quota of 1.5 million barrels per day in 2025, struggles to shield its domestic market from these fluctuations. The Dangote Refinery, though operational, has not yet fully reduced the country’s dependence on imports, leaving depot prices exposed to Brent’s movements.
Outlook
With Brent crude nearing $74 per barrel, Nigeria’s policymakers and depot operators face mounting pressure. The Ministry of Petroleum Resources has yet to indicate potential interventions, leaving uncertainty in its wake. For now, Nigerians brace for the possibility of higher fuel costs, a looming challenge in an already strained economic landscape.
