Nigeria is bracing for a significant hike in petrol prices, with projections indicating that the cost per litre could soar to nearly ₦900.
According to Reuters, this development comes in the wake of new sanctions imposed by the United States (U.S.) on Iran, which have disrupted global oil supplies and triggered a sharp increase in international crude oil prices.
On Thursday, Brent crude futures were up 97 cents, or 1.37 per cent, to $71.75 a barrel by 10:57 a.m EDT (14.57 GMT), having gained more than $1 during the session.
The U.S. on Thursday issued new Iran-related sanctions, targeting one individual and several entities, including a Chinese “teapot” oil refinery, for purchasing and processing Iranian crude oil, the U.S. Treasury Department website showed.
Iran produces more than three million barrels per day of crude oil.
“We were looking for some kind of catalyst to move and that was the ticket that pushed us back towards the high,” said Phil Flynn, senior analyst with the Price Futures Group.
Meanwhile, U.S. government data showed a higher-than-expected drawdown last week in distillate inventories, including diesel and heating oil, which fell by 2.8 million barrels, outstripping a drop of 300,000 barrels expected in a Reuters poll.
Global risk premiums rose after Israel launched a new ground operation on Wednesday in Gaza after breaking a ceasefire of nearly two months.
“Amid the prevailing uncertainty, the risk of sanctions is once again coming into focus, as the Trump administration adopts a tougher stance on Venezuela, Iran, and Russia,” J.P. Morgan analysts said in a note on Thursday.
For Nigeria, a country heavily reliant on movement in Pratts and international crude oil prices, the impact is expected to be severe.
Data gleaned by BusinessDay showed petrol price movements at loading depots on Thursday noon increased to ₦875 per litre from ₦852 per litre sold earlier in the day.
Matrix Warri effected an increase of ₦22 from ₦852 to ₦875 per litre, with Zamson Depot raising its price from ₦853 to ₦875 per litre. Rainoil depot made the same price change from ₦853 to ₦875 per litre, while Pinnacle Warri and Sobaz changed their prices to ₦875 per litre from ₦854 and ₦870, respectively.
This development means Nigerians, who have experienced three petrol price reductions by Dangote Refinery since January, will be bracing for higher prices at the pump.
On Wednesday, the Dangote Group said the suspension of petroleum products’ sale in naira is temporary, citing a mismatch in sales proceeds and crude oil purchase obligations, which are currently denominated in U.S. dollars.
