Economy
Petrol Prices May Drop Further As Crude Oil Prices Decline
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Petrol Prices May Drop Further as Crude Oil Prices Decline
By Hussaini Ibrahim Kafi
The price of Premium Motor Spirit (PMS) in Nigeria may decrease further following a drop in global crude oil prices, an economist has suggested.
Oil prices fell by approximately two percent this week, reaching a 12-week low after reports that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) plan to increase oil production in April. Brent crude futures dropped by $1.19, or 1.6%, closing at $71.62 per barrel, while U.S. West Texas Intermediate (WTI) crude declined by $1.39, or 2%, settling at $68.37 per barrel.
Economist Paul Alaje stated that given current market conditions, a reduction in petrol prices is not only viable but necessary. He suggested that PMS should be sold for less than ₦700 per litre, emphasizing that exchange rate stability and crude oil price trends play a key role in determining pump prices.
“It is sustainable to reduce petrol prices to ₦700 based on today’s reality of the exchange rate,” Alaje said. “The challenge we may have is a global crisis that makes the price of crude oil go up. If that happens, we are going to see the difference. But for now, we are seeing relative stability.”
However, Alaje cautioned that while petrol prices may decline in the short term, any global crisis that drives up crude oil prices could reverse the trend. He also noted that based on recent calculations, the appropriate price range for PMS should be between ₦795 and ₦820 per litre.
The possibility of a petrol price reduction comes amid ongoing concerns over the cost of living in Nigeria, where high fuel prices have contributed to inflationary pressures on transportation and goods. As global crude prices continue to fluctuate, many consumers are hopeful that lower oil prices will translate into reduced fuel costs at the pump.
