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

Nigerians will be experiencing a nationwide surge in the cost of premium motor spirit (PMS) after Dangote Refinery increased prices as its gantry to ₦995 per litre.

This becomes the second time the refinery is increasing its gantry cost for PMS after it initially increased its cost from ₦774 to ₦874 per litre.

With the latest increase from ₦874 to ₦995 per litre, this means a ₦221 price addition in four days, which reflects a direct repercussion of the ongoing Iran -US conflict that has impacted the production and supply of oil from the Middle East.

The implication is that fuel prices across the country will likely surpass ₦1,000 per litre, which will further lead to an increase in goods and services dependent on PMS.

Dangote Refinery, which has a 650,000 barrels production capacity, is one of the biggest in the world. The refinery, which is already capable of meeting Nigeria's daily fuel consumption needs with further exporting capacity, says its mission was to eliminate the country's fuel importation dependency.

In a press release addressing the company's decision to increase fuel prices, Dangote Refinery blamed it on the rising global cost of sourcing crude oil, which increased by 26% and now sells $84 dollar per litre. The Refinery purchases a bulk of its crude oil abroad, and the global shortage has increased its production cost.

Dangote refinery further revealed that it implemented a measured adjustment of ₦100 per litre in its price of premium motor spirit, which reflects an increase of 12% while absorbing a 20% increase in the cost of production. The latest addition of another ₦121 to the gantry price of PMS reflects the refinery's attempt to offset its growing production cost.

The escalation of tensions between the US and Iran has created collateral economic damage to Middle Eastern states whose oil production capacity has been stunted, while distribution has also been affected by the Iranian closure of the Strait of Hormuz.

In retaliation for the US and Israeli strikes that killed its Supreme Leader, Ayatollah Ali Khamenei, Iran attacked oil production facilities in Saudi Arabia, the United Arab Emirates, Qatar, and Oman, which are American allies.

The Middle East currently accounts for nearly 20% supply of the global daily oil consumption, with Saudi Arabia, UAE, Qatar, Kuwait, Oman, Iran, and Iraq all exporting oil to Eastern Asia, Europe, and even African countries.

Without the Middle Eastern oil flowing to other parts of the world, the global economy, including Nigerians, will continue to feel the impact in the form of rising pump prices for PMS and inflation in the prices of goods and services.