Petrol price hike looms as oil hits $110/barrel

•Marketers warn of higher distribution costs

•Refiners seek cheaper crude

Nigeria faces fresh pressure on petrol and diesel prices following a sharp rally in global crude oil prices to nearly $110 per barrel at the weekend.

Already, industry experts are warning that sustained increases could raise domestic fuel costs despite expanding local refining capacity.

For Nigerian businesses, sustained increases in diesel and petrol prices could raise the cost of running generators, transporting goods and operating equipment. Manufacturers, farmers and transport operators could pass some of the additional expenses to consumers, while higher haulage costs could increase the prices of food and other essential goods.

The development, analysts note, presents a dilemma for Africa’s largest oil producer, which stands to earn more from crude exports but remains vulnerable to rising energy costs that could further squeeze households, manufacturers, transport operators and other businesses.

Brent crude, the international benchmark, rose 3.72 per cent to about $109.90 per barrel, while West Texas Intermediate, the US benchmark, gained 3.51 per cent to $101.40 per barrel. Murban crude also advanced 3.08 per cent to $113.40 per barrel, according to market data published by Oilprice.com.

The rally followed escalating geopolitical tensions and attacks on energy infrastructure, heightening fears of supply disruptions and sustained pressure on global energy markets.

Publicity Secretary of the Crude Oil Refiners Association of Nigeria (CORAN), Mr. Eche Stephen Idoko, while commenting on the development, said the central concern was the contradiction of an oil-producing country potentially earning more from crude exports while its citizens remained exposed to higher energy costs.

“Ordinarily, rising crude prices should be good news for Nigeria’s revenues and foreign exchange position. However, the benefits could be substantially undermined by rising costs of transportation, manufacturing, agriculture and ultimately the general cost of living,” Idoko said.

He argued that higher crude prices also increase the cost of feedstock for Nigerian refiners, stressing that domestic refining alone cannot insulate consumers from international oil price movements.

According to him, the naira-for-crude arrangement addresses the currency of settlement but does not necessarily reduce the underlying cost of crude oil.

Idoko called for a commercially sustainable domestic crude supply and pricing framework, arguing that local refiners should not have to bear unnecessary logistics, financing and transactional costs associated with crude supply arrangements.

He also questioned how much of the additional revenue accruing to Nigeria from higher crude prices would translate into reducing the structural cost of supplying energy to Nigerians.

For CORAN, he said, the priority should be to strengthen domestic refining competitiveness rather than rely on further government-administered retail discounts or price ceilings.

Idoko noted that there was a real risk of higher fuel prices if crude oil remained at elevated levels, although the extent of any increase would depend on exchange rates, international petroleum product prices, refining margins and domestic supply conditions.

Executive Secretary and Chief Executive Officer of the Major Energies Marketers Association of Nigeria (MEMAN), Mr. Clement Isong, also identified rising international product prices and distribution expenses as potential sources of additional pressure on domestic fuel prices.

In a webinar presentation titled “Structuring Nigeria’s Domestic Market Distribution Framework” delivered at the weekend, Isong said the final price paid by consumers reflected not only international product prices and foreign exchange movements, but also freight, financing, transportation, regulatory charges and distribution costs.

He further warned that rising diesel prices could compound the cost of distributing petrol because diesel is a critical input in road transport and the movement of petroleum products.

According to the presentation, petrol prices rose by 33 per cent to N1,378 per litre between January and October 2026, while automotive gas oil, commonly known as diesel, increased by 36 per cent to N1,853 per litre.

Isong said higher diesel prices increased the cost of transporting petroleum products, including petrol, adding to distribution expenses and wider economic pressures.

The latest crude oil rally could intensify these pressures if it translates into higher international petroleum product prices and replacement costs for refiners and marketers. Any impact on pump prices, however, would depend on movements in international product prices, exchange rates, refining margins and domestic supply conditions.

The pressure on refined products is also being compounded by tight global diesel supplies. According to the market report published by Oilprice.com on October 16, the International Energy Agency warned that diesel supplies could remain tight into 2027, with inventories unlikely to be rebuilt before the third quarter of next year.

Global diesel production reportedly fell by 1.7 million barrels per day year-on-year to 27.2 million barrels per day, highlighting the pressure on supplies of a fuel widely used in transportation, manufacturing, agriculture and electricity generation.

Isong added that Nigeria also needed a more efficient distribution system to minimise avoidable expenses between refineries and consumers.

He recommended that domestic refineries serve as a major source of supply as production becomes commercially available, with imports used to bridge domestic supply deficits through competitive procurement based on the lowest evaluated price.

He also called for predictable bulk supply arrangements, transparent pricing methodologies and better coordination among suppliers, depot operators, transporters and purchasers to reduce operational delays and logistics costs.

The MEMAN chief executive further advocated supply-chain cost reductions, targeted and temporary relief for essential economic activities, and reduced dependence on petrol and diesel through alternatives such as compressed natural gas, electric vehicles and small-scale solar power.

He maintained that efforts to reduce costs should preserve market-based pricing.

Also commenting, energy policy analyst and partner, Bloomfield Law Practice, Mr. Ayodele Oni, posited that Friday’s $110 is not a new crisis.

“Brent topped $120 in April, and Nigerians have already absorbed much of this shock. The real question is whether $110 becomes the floor,”.

Oni argued that in a deregulated market, there is no subsidy buffer, so a sustained rise will reach the pump, warning that if Brent holds above $105 for a few weeks, the recent easing of gantry prices will reverse.

According to him, domestic refining softens the blow by removing freight, import costs and foreign exchange demand for imported fuel, saying without the Dangote refinery, the pass-through today would be far steeper.

“Price shocks come from abroad. Our vulnerability to them is a choice,”.