Nigeria's downstream oil sector is experiencing a price war, with major players like Dangote Petroleum Refinery and the Nigerian National Petroleum Corporation Limited (NNPCL) engaging in frequent price reductions.
This trend began in November 2024 when Dangote Refinery lowered its petrol price to N970 per litre. While beneficial for consumers, these price cuts have resulted in significant losses for oil marketers and importers.
To mitigate losses, marketers are reducing their purchase volumes, buying only what they can sell within a week. The drop in global crude oil prices has contributed to lower landing costs for petrol, making it cheaper for importers. Experts predict that if global oil prices continue to decline, petrol prices in Nigeria could fall to around N800 per litre.
However, economist Bismarck Rewane warns that if global crude oil prices rise again, petrol prices in Nigeria will also increase. This price volatility highlights the challenges faced by the Nigerian oil sector, where market forces and global trends can significantly impact local prices.
A price war between Dangote Refinery and the Nigerian National Petroleum Corporation Limited (NNPCL) is expected to continue, with experts predicting further price reductions if global oil prices drop.
While the price war offers potential benefits for consumers, it has also led to significant losses for oil marketers and importers, prompting them to reduce their purchase volumes. This situation highlights the complex interplay of global oil prices, local market dynamics, and the impact on various stakeholders within Nigeria's oil sector.
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