Cost of PMS may drop further as crude prices fall

The price of Premium Motor Spirit (petrol) could continue to decline if crude oil prices keep dropping, especially if the naira remains stable against the dollar in the foreign exchange market.
This week, oil prices fell nearly two percent to a 12-week low following reports that OPEC+ will go ahead with its planned oil output increase in April. Brent futures dropped by $1.19, or 1.6%, settling at $71.62 per barrel, while the United States West Texas Intermediate crude fell by $1.39, or two%, closing at $68.37. According to Reuters, these were the lowest closing prices for Brent since December 6 and for WTI since December 9.
Reports also revealed that the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, known as OPEC+, decided to proceed with the planned oil output increase for April.
In Nigeria, industry players note that crude oil prices and exchange rates are the key factors influencing the cost of refined petroleum products. Last week, the Dangote refinery reduced its ex-depot PMS price from N890 per litre to N825. The Nigerian National Petroleum Company Limited (NNPC) followed suit, leading to what many have referred to as a “price war.”
Economist Paul Alaje believes the recent petrol price reduction is sustainable and could see prices drop below N700 per litre, given current market conditions. However, he cautions that any future increase in global crude oil prices due to a global crisis could pose a challenge to this trend.
“It is sustainable to reduce petrol prices to N700 based on today’s reality of the exchange rate. 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,” Alaje said on Channels Television.
He added, “As of today, our computation reveals that PMS should be around N795 to N820 per litre.”
Billy Gillis-Harry, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria, has emphasized that petrol prices will continue to fluctuate in response to foreign exchange rates and international crude oil prices.
While lower crude oil prices typically lead to more affordable fuel for the average Nigerian, the current price is still below the $74 per barrel forecasted by the Federal Government in the 2025 budget.