By Daramola Joseph
The Nigeria’s petrol prices could surge beyond N700 per litre by September, because of the global oil market dynamics brought about by the voluntary output cuts by major producers including Saudi Arabia and Russia.
The increasing fuel costs are a result of crude oil prices that have tripled in the past eight weeks, driven by ongoing cuts in output by the two major oil producers.
Saudi Arabia, the second largest oil producer, has announce plans to cut another million barrels per day from September, just as it did in July. The kingdom has also reduced oil exports by 1 million bpd to support higher oil prices.
Russia, the third largest oil producer, contributed to the surge in oil prices by cutting oil production in August. Analysts anticipate further price increases due to growing oil demand in the upcoming months.
Nigerian National Petroleum Company Limited (NNPCL) attributed the rising oil prices at pumping stations to “market forces,” highlighting the impact of the deregulation of the oil industry. NNPCL’s Group CEO, Mele Kyari, emphasized that market realities may lead to fluctuations in gasoline prices.
Reports by Nairametrics suggest that these production cuts, extended through September, are further tightening the global supply of oil. Brent crude hit an intraday peak at $86.64, the highest since mid-April, and the global benchmark oil price rose nearly 2% for the week, following a substantial 14% gain in July.
However, Nigeria’s fuel challenges are aggravated by the delays in the Dangote refinery and the non-functioning state-owned refineries, forcing the country to rely heavily on expensive imports despite being a major oil and gas producer in Africa.
The nation’s reliance on costly imports and the lack of functional refineries further exacerbates the situation, calling for sustainable solutions to address the fuel price challenges.
Source: Nairametrics
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