Petrol Distributors Halt New Purchases Amid Price Surge
Petrol distributors in Nigeria have paused new acquisitions of Premium Motor Spirit (PMS) after the price in private warehouses in Lagos surged to N1,220 per litre. This spike follows an unexpected halt in fuel loading at the Dangote Oil Refinery, which has contributed to rising uncertainty in the downstream market.
Market Uncertainty Prompts Caution Among Gas Stations
The uncertainty surrounding fuel supply has led many gas stations to refrain from placing new orders. Stakeholders are apprehensive about potential fluctuations in pump prices as they await the resumption of operations at local refineries.
Dangote Refinery’s Unannounced Halt Affects Supply Chain
Oyewole Akanni, the Western Region Chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN), indicated that the Dangote refinery ceased loading PMS about four days ago without notice. Consequently, market players have been compelled to source the product from private warehouses at substantially inflated prices.
Fuel Prices Driven by Depot Costs
Akanni explained that the current shortage at filling stations and the closure of others stem from volatility in the price of lifting fuel from depots. With private depot owners increasing prices since the loading suspension at the Dangote Refinery, many stations that have depleted their stocks are hesitant to purchase more until they have clearer visibility on future pricing.
Price Fluctuations Impact Retail Strategies
The lowest ex-warehouse prices at private warehouses in Lagos now range between N1,200 and N1,220 per litre, excluding transportation fees. Market players who recently replenished their supplies reported costs between N1,210 and N1,220 per litre. Although products continue to be available from companies like NIPCO and Aiteo at around N1,200 per litre, fluctuating warehouse prices complicate the setting of retail rates.
Global Tensions Drive Oil Prices Higher
This disruption follows a prior reduction in ex-depot petrol prices by Dangote Refinery to N1,075 per litre on July 2, aimed at reflecting declining global oil prices. However, renewed conflicts involving the United States and Iran have caused oil prices to surge, with Brent crude nearing $90 per barrel, further impacting refined product prices.
Dangote Refinery Changes Pricing Strategy
As of last week, the Dangote Refinery transitioned to a dollar-based pricing model for petrol, setting the depot price at $0.779 per litre. With the current official exchange rate hovering around 1,380.50 naira to the dollar, this pricing strategy effectively translates to approximately N1,075.61 per litre.
Supply Disruption Raises Concerns Over Fuel Availability
Akanni noted that the refinery had not provided clarity regarding the reasons behind the suspension of PMS sales, which has left four petrol trucks stranded since the loading stoppage. While he highlighted that Nigeria was not experiencing a fuel shortage, he cautioned that persistent disruptions could lead to increased pump prices. Market participants are now closely monitoring developments at the Dangote refinery, as its loading resumption is expected to significantly influence retail petrol prices across the nation.
