The price of Premium Motor Spirit (PMS), commonly known as petrol, could continue to fall if crude oil prices remain on a downward trend, according to industry experts.
The recent drop in global oil prices has raised expectations that Nigerians could benefit from lower fuel costs, especially if the naira maintains its stability against the dollar.
Oil prices fell sharply this week, with Brent crude dropping to $71.62 per barrel and West Texas Intermediate (WTI) falling to $68.37 per barrel.
This marks the lowest closing prices for both since December. Reports indicate that OPEC+ will increase oil output starting in April, which could drive prices even lower.
An economist, Paul Alaje, believes that current market conditions suggest petrol could be reduced to as low as N700 per litre. He highlighted the key role of exchange rates and crude oil prices in determining fuel costs.
“It is sustainable to reduce petrol prices to N700 based on today’s reality of the exchange rate,” Alaje said. However, he warned that any global crisis leading to an increase in crude prices would reverse these gains.
In response to the falling oil prices, major Nigerian oil players, including Dangote Refinery, have already reduced their prices.
The Dangote refinery recently lowered its ex-depot price for PMS from N890 per litre to N825, and the Nigerian National Petroleum Company Limited (NNPCL) followed suit. This has sparked what many are calling a price war in the sector.
The price cuts are considered sustainable in the short term, with Alaje predicting that petrol could hover between N795 and N820 per litre if the current trends hold.
However, with Nigeria’s 2025 budget projecting a crude oil price of $74 per barrel, these price drops may still be below the government’s forecast.