The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, has attributed the recent adjustment in petroleum product prices in Nigeria to rising crude oil prices in the global market, triggered by escalating geopolitical tensions in the Middle East.
In a statement released on Monday, Yusuf explained that crude oil, which is the primary input for refining petroleum products, accounts for the largest share of refinery production costs globally.
He noted that crude oil prices recently surged from about $65 per barrel to over $100 per barrel, representing an increase of more than 50 percent within a few weeks.
According to him, the spike in crude prices has pushed up the cost of refined petroleum products worldwide, including petrol, diesel, aviation fuel and liquefied petroleum gas (LPG).
The CPPE Chief Executive added that because petroleum products are traded in an integrated global market, changes in crude oil prices are usually reflected in domestic fuel prices across many economies, including Nigeria.
He explained that although the expansion of domestic refining capacity in Nigeria is expected to improve supply stability, it cannot completely shield the country from global oil price volatility.
Dr. Yusuf said crude oil supplied to domestic refineries is priced using international benchmarks and denominated in U.S. dollars, meaning local refiners still purchase crude at prevailing global market rates.
He noted, however, that domestic refining offers some cost advantages through reduced logistics expenses such as shipping, marine insurance, port handling and demurrage, which are typically associated with importing petroleum products.
Beyond price considerations, Yusuf said local refining strengthens Nigeria’s energy security by reducing reliance on imported fuel and limiting exposure to global supply disruptions.
He added that it could also lead to significant foreign exchange savings, noting that Nigeria previously spent between $10 billion and $15 billion annually on fuel imports.
According to him, increased domestic refining capacity could also position Nigeria as a potential exporter of refined petroleum products while stimulating industrial growth through linkages with petrochemicals, fertilizers, plastics and other manufacturing sectors.
Yusuf stressed the need for supportive government policies to sustain investments in refining, including reliable crude supply arrangements, improved petroleum distribution infrastructure and measures to enhance export competitiveness.
He concluded that while domestic refining cannot eliminate the effects of global oil price fluctuations, it remains critical to strengthening Nigeria’s energy security, conserving foreign exchange and improving the country’s economic resilience.
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