Nigeria Fuel Prices, Inflation Rise as Oil Nears $100+ Amid Strait of Hormuz Crisis
Nigeria’s economy is once again under pressure as global crude oil prices edge toward the $100-per-barrel mark following escalating geopolitical tensions in the Middle East. A reported naval blockade of the Strait of Hormuz has rattled energy markets worldwide, with analysts warning that crude could spike as high as $127 per barrel if disruptions continue. The development has raised fresh concerns for oil-import dependent pricing structures and domestic inflation in Nigeria.
The shock in global oil markets has already triggered volatility, with Brent crude climbing sharply as traders react to fears of supply disruption through one of the world’s most critical shipping routes. Market forecasts from major financial institutions, including JPMorgan Chase, suggest oil could remain above $100 in the near term before easing later in the year—fueling uncertainty for both producers and consumers.
In Nigeria, the impact is already being felt at the pump. Premium Motor Spirit (petrol) prices have remained near ₦1,300 per litre despite recent crude fluctuations, while diesel trades close to ₦2,000 per litre. Experts warn that if crude sustains its upward momentum, petrol prices could climb toward ₦1,500 per litre or higher, adding fresh strain to households and businesses already battling high living costs.
At the centre of the downstream pricing system is the Dangote Petroleum Refinery, which continues to adjust ex-depot prices in response to global crude movements. The refinery, which supplies a large share of Nigeria’s daily fuel consumption, recently raised prices when crude crossed $100 and later reduced them when prices eased. Analysts now expect another upward adjustment if oil remains above current projections, especially given its reliance on imported crude in a tight global market.
Economic experts are divided on the best response. While some, including the World Bank, have suggested reopening petrol import licences to boost competition and stabilize prices, others argue it could reverse recent reforms and weaken investor confidence. Meanwhile, analysts warn that rising fuel costs will likely accelerate inflation, even as higher oil prices could boost Nigeria’s foreign exchange earnings. For now, the country remains caught between global volatility and domestic economic pressure, with policymakers facing renewed scrutiny over how to balance market reforms with social stability.
source: The Guardian