With fuel marketers implying that the landing cost of gasoline has increased month-over-month, MoM, by 37.4% to N632.17 per litre in July 2023 from N460 per litre in June 2023, there are strong indications that the pump price of fuel is expected to record another round of increases. This would be the third increase in less than ten weeks.
The landing cost does not include other out-of-pocket expenses such as deport-related fees, transportation logistics, and marketers’ margin, which together would result in distribution at filling stations costing close to N700 a litre.
It is expected that the landing cost for August is anticipated to increase further as a result of factors that contributed to the worsening of those variables as of last week.
Nigeria’s supply of crude oil is currently dropping, endangering the country’s ability to import refined goods, and the situation appears to be getting worse.
The Organisation of Petroleum Exporting Countries, or OPEC, noted the declining output of many countries in its August 2023 Monthly Oil Market Report, MOMR, obtained by Financial Vanguard. OPEC also noted that Nigeria’s oil production decreased on an annual basis by 6.5% to 1.26 million barrels per day, or bpd, in July 2023 from 1.2 million bpd recorded in the same period of 2022.
It also mentioned that the country’s output fell by 3.0% month over month, from 1.3 million bpd in June 2023 to 1.26 million bpd in July 2023.
Commenting on the oil price situation to newsmen, Mike Osatuyi, the National Operations Controller, Independent Petroleum Marketers Association of Nigeria, IPMAN, said: “It is good because the high crude oil prices mean additional revenue to the federal government. The revenue would likely be used to fund projects and programmes because the government is no more involved in the payment of fuel subsidy.”
The primary importer is still the Nigerian National Petroleum Company minimal (NNPCL), with minimal private imports.
Nigeria’s diminishing crude oil production, which affects the nation’s ability to import refined goods, makes the issue worse. Nigeria’s production is declining, and this has been observed by the Organisation of Petroleum Exporting Countries (OPEC).
According to other experts who provided their opinions on the matter, the high price of crude oil could bring in more money for the government, even if it means that consumers may have to pay more for fuel.
With growing crude oil prices and the Naira’s devaluation perhaps continuing to affect prices and posing difficulties for deregulation initiatives, the overall market situation is still unknown.