By Motolani Oseni
The Major Oil Marketers Association of Nigeria (MOMAN) has said that fluctuating international crude oil prices and exchange rate movements are causes of higher domestic petrol prices, accounting for about 80 per cent not of the cost structure of petrol or PMS retail price.
According to the marketers’ association, this reflects the country’s current economic realities, as the downstream sector has been deregulated.
The liberalisation of the oil market presently allows for greater competition and efficiency and should lead to increased importation of PMS, with domestic prices reflecting exchange rate pressures and international oil costs.
As of May 2023, the exchange rate stood at about N460/$ with an international crude oil price of about $70 per barrel and a domestic petrol price of about N195 per litre.
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However, the exchange rate and international crude oil price have risen to N793 per US dollar and US$75.46 per barrel, respectively, raising the domestic price of petrol to somewhere between N560 and N650 per litre, depending on the location.
Analysts believe an increase in domestic crude oil production to the 2m barrel per day projection would earn the country more FX revenue and improve the exchange rate conditions.
Similarly, domestic refining should also provide a price cushion for petroleum products to neutralise the effect of FX movements on the product prices.
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