- Fuel prices in Nigeria rise quickly due to cost recovery needs amidst global oil volatility
- Marketers gradually lower petrol prices to avoid destabilising the supply chain and ensure stability
- Public concern over price fluctuations grows, highlighting the need for clearer policies amid global influences
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Fuel marketers have taken a strong stand on fuel costs and explained why petrol prices in Nigeria often spike quickly but take longer to decline, even as landing costs fall below local benchmarks.
Speaking during a webinar hosted by the Major Energy Marketers Association of Nigeria (MEMAN), Chairman Hubb Stokman said the pattern is a normal market response driven by cost recovery, inventory realities and global oil volatility.
Credit: Bloomberg/Contributor
Source: UGC
According to him, the rapid increase in pump prices during periods of rising costs is largely about survival. Marketers must quickly adjust prices to generate enough working capital to purchase fresh supplies.
“When prices go up, especially rapidly, dealers need to reflect those increases immediately to afford the next truck of fuel,” he explained.
Failure to do so, he added, could leave marketers unable to restock, potentially disrupting fuel availability nationwide.
Inventory costs slow down price drops
While price increases are swift, reductions tend to be gradual due to existing stock bought at higher rates.
Stokman noted that marketers often adopt a cautious approach when prices begin to fall, easing them down instead of making sharp cuts. This strategy helps cushion losses and maintain market stability.
He described it as creating a “parachute” effect — a buffer that prevents sudden swings in pricing.
Rather than a quick drop, prices are adjusted gradually to avoid a cycle of constant fluctuations that could destabilise the supply chain.
Global oil volatility still drives local prices
Industry experts say Nigeria’s petrol pricing remains heavily influenced by international market forces.
According to a Punch report, energy analyst Joe Nwakwue pointed out that global crude oil movements, particularly Brent crude, are directly transmitted into the domestic market due to the country’s pricing structure.
“Whatever happens globally that affects crude oil prices will impact Nigeria,” he said.
This exposure means that geopolitical tensions, such as crises in oil-producing regions, can trigger sudden price shocks that are immediately felt at the pump.
Import parity keeps the market sensitive
Nigeria’s downstream sector operates largely on import parity pricing, meaning local petrol prices reflect international costs and foreign exchange dynamics.
Even with increased domestic refining capacity, including output from local refineries, the market remains sensitive to imports.
Nwakwue stressed that maintaining a competitive, open market is essential to ensuring fair pricing.
He argued that allowing fuel imports prevents monopolistic pricing and keeps domestic refiners in check.
“The only way to ensure a truly competitive market is to continue allowing imports,” he said, noting that competition influences pricing decisions across the board.
Transparency makes price changes more noticeable
Unlike many consumer goods, fuel pricing is highly transparent, making fluctuations more visible to the public.
Stokman said this visibility often amplifies consumer perception, even though similar pricing patterns exist in other industries.
“Fuel is just more transparent than most products, so people notice every change,” he noted.
Growing concerns over price fluctuations
The explanations come amid rising public concern over frequent petrol price changes, especially at a time when landing costs have reportedly dropped below some domestic supply rates.
Stakeholders are increasingly calling for clearer policies and targeted measures to cushion consumers from volatility.
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Source: Getty Images
Despite these concerns, marketers insist that pricing behaviour is driven by market fundamentals and that until Nigeria reduces its exposure to global oil dynamics, fluctuations will remain a defining feature of the sector.
Marketers release new petrol prices
Legit.ng previously reported that petroleum marketers have begun announcing new petrol prices across Nigeria as escalating tensions involving Iran and other Middle East oil producers disrupt global crude supply and push international oil prices above $100 per barrel.
The latest developments in the global oil market are already rippling through Nigeria’s fuel market, raising concerns among households and businesses that depend heavily on petrol and diesel for transportation and power generation.
While higher crude prices could boost government revenues from oil exports, the immediate impact for Nigerians is rising fuel costs and increased pressure on living expenses.
Source: Legit.ng