Dangote Refinery Increases Petrol Price to ₦1,175

The Dangote Refinery has jacked up the price of Premium Motor Spirit (PMS), commonly known as petrol, to ₦1,175 per litre. This is the third time they've increased petrol prices in just seven days.

This latest price jump, which was announced to marketers and depot operators on Monday, pushes the ex-depot price up from ₦995 per litre, which was set just on Friday. That's an increase of ₦180, representing a pretty sharp 18.1% jump in just three days.

On top of that, the refinery has also tweaked the price of Automotive Gas Oil (diesel), setting it at ₦1,620 per litre. This new price follows earlier adjustments that had already hiked diesel prices from ₦774 to ₦995 per litre last week.

These changes by Nigerian oil companies seem to be in response to the global energy crisis, partly sparked by events in the US and the ongoing conflict with Iran, which is now in its second week. On Monday, Brent crude oil was trading above $105 per barrel.

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This latest round of price hikes suggests the market is quickly shifting its focus. It's moving beyond just reacting to problems with logistics, like delays or higher shipping costs caused by risks in the Strait of Hormuz, and now it's starting to worry about a potential major disruption to the actual supply of oil.

Recent events are pointing towards potential problems for actual production and export volumes among major Gulf producers. This development is fundamentally making people expect tighter global supply.

“The pace at which oil prices moved from below $100 to above $115 highlights how thin the market’s spare capacity buffer has become.

“Even relatively small disruptions to Gulf production can trigger outsized price movements because the region accounts for a disproportionate share of globally traded crude”, Globaldata said in a commentary note.

“The current surge in prices also reflects the concentration risk within the global oil system. A large share of exports from Saudi Arabia, Iraq, Kuwait, and the UAE passes through the Strait of Hormuz, leaving global energy supply exposed to geopolitical disruptions in a single maritime corridor.

READ ALSO: Fuel Costs to Rise Nationwide as Dangote Refinery Increases Price to ₦995 per Litre

Meanwhile, financial markets are already starting to factor in the wider economic fallout from this oil shock. This includes things like higher expected inflation, currency fluctuations, and pressure on stock markets in countries that rely on importing energy. An example of this shift is Oando, which saw its stock price jump 19% as investors started paying more attention to energy sector stocks.