Oil price drops, marketers keep pump price high
By Udeme Akpan, Energy Editor & Ediri Ejor
Crude oil prices including Nigeria’s Bonny Light has dropped significantly to $98 per barrel amid growing speculation that the US-Iran war — a major factor driving the current market instability — may soon come to an end.
But contrary to expectations pump prices in Nigeria remained high as marketers who had responded swiftly with price mark up earlier in the week following upswing in crude oil price refused to revert to previous price.
Crude oil prices began declining after President Donald Trump stated that efforts were ongoing to end the US-Iran conflict, fueling optimism across the global oil market.
The decline marks the lowest level in the past three weeks after prices had hovered between $110 and $120 per barrel at the height of tensions between the United States and Iran.
According to Reuters: “Oil prices fell 3% on Thursday, bouncing off session lows in volatile trade but staying down about 3%, keeping Brent below $100 a barrel on hopes that a U.S.-Iran peace deal could bring a gradual reopening of the Strait of Hormuz.
“Brent crude futures were down $3.21, or 3.17%, at $98.06 a barrel at 11:21 a.m. ET (1521 GMT). U.S. West Texas Intermediate declined $3.15, or around 3.31%, at $91.93.
“Trading was volatile, with both benchmarks trading in a range of up 1% to down 5.5% from the previous close. Both benchmarks slumped more than 7% on Wednesday, hitting two-week lows on optimism over a possible end to the Middle East conflict.”
Market operators resist adjustment.
Checks by Vanguard indicated that depot owners have continued to sell the product at N1,285 per litre.
Depots selling at N1,285 per litre include A.A. Rano, African Terminal, Aiteo, Ascon and Bono, while some others sell at even higher prices.
At filling stations, checks showed that MRS sold petrol at N1,332 per litre in Lagos and its environs, while many others — especially independent marketers — retailed the product at N1,342 per litre and above depending on location.
The bottom range in few other fuel stations run by major marketers were selling at between N1,320 and N1,325 in Lagos.
The checks further showed mounting pressure on midstream and downstream operators to respond to developments in the global oil market.
The Chief Executive Officer of Petroleumprice.ng, Olatide Jeremiah, confirmed the pressure on domestic market operators, saying: “There is a mismatch. Depot prices are not reacting to the continuous fall in crude oil prices, and this could be traced to limited supply of refined products across different petroleum depots in Nigeria.
“This is the result of having a few dominant suppliers. Prices are determined by some of the market leaders and not international benchmarks.”
Similarly, the National President of the Oil and Gas Services Providers Association of Nigeria, OGSPAN, Mazi Colman Obasi, said: “Since we have a deregulated market where prices are determined by market forces, we should expect domestic prices to adjust in the coming days or weeks if the current global oil market conditions remain unchanged.”
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