By Amos Aar
When tensions between the United States, Israel and Iran threatened global oil supplies through the Strait of Hormuz, the impact was almost immediate in Nigeria. Within days, filling stations adjusted pump prices upward as international crude oil prices surged from about N800 to N1,400 per litre.
Months after hostilities eased and global crude prices retreated, however, the expected relief at the pump has been slow to come, leaving many Nigerians wondering why petrol prices rose almost overnight but have been reluctant to fall. The product is still being sold for N1300 at many filling stations
For public commentator and veteran journalist Emmanuel Obey, the answer lies in the structure of Nigeria’s deregulated downstream petroleum sector, where market forces, profit considerations and import logistics largely determine what consumers pay.
“The downstream sector has been deregulated. Those who are importing petroleum products are in business for profit. They spend their money and naturally want to recover it”, Obey said in an interview with our reporter.
According to him, petroleum importation is not an instant process. Products sold today may have been purchased weeks or even months earlier under contracts negotiated when global oil prices were much higher.
“Importation and handling of petroleum products come with bookings. It is not something you wake up one morning and buy. You have to arrange with suppliers, and some of these arrangements were made before the crisis around the Strait of Hormuz ended,” he explained.
He also believes marketers are often reluctant to reduce prices immediately because they seek to maximise returns on their investments.
“Of course, investors also try to make as much money as possible before they finally come down to the normal thing,” he said.
While some analysts have cited foreign exchange fluctuations as a factor influencing domestic fuel prices, Obey disagrees.
“I don’t want to think that foreign exchange issues are part of it because the foreign exchange rate during this period didn’t go up. So we can’t say the cost of the dollar was high. That wasn’t part of it.”
His observations echo concerns raised in Nigeria’s media. An editorial by The Guardian argued that the downstream market reacts to negative developments “with the speed of a rocket” but embraces positive developments “with the reluctance of a feather,” suggesting that commercial interests often slow the transmission of lower international prices to Nigerian consumers.
Similarly, Daily Trust reported that although Brent crude prices had fallen significantly after tensions in the Middle East eased, petrol continued to sell above N1,000 per litre in many parts of the country, fueling public frustration.
Despite the deregulated nature of the sector, Obey believes the Federal Government should have stepped in because the sudden spike in global oil prices amounted to an emergency.
“It’s a sudden and emergency situation. In every emergency all over the world, governments intervene,” Obey said.
He noted that governments routinely suspend normal policy responses during crises, citing emergency spending during disease outbreaks and other national emergencies.
“Fuel is so important to the Nigerian economy that government cannot afford to just look away. If people are not able to buy fuel to power their homes, industries and businesses, it affects the economy and the welfare of the people”, he noted.
For Obey, the consequences are not merely theoretical. They are part of his daily life.
“Even me, a private citizen, I’m having issues because we have not had electricity for several months now.
“Sometimes I have to buy fuel to run my generator and charge my devices. If I cannot, my devices go off. The things I ordinarily do, I can no longer do. I now do them in snatches and batches just to save money”, Obey lamented.
He said millions of Nigerians face similar realities as they struggle with high transport fares, expensive electricity alternatives and rising living costs.
“As it is with me, so it is with so many households all around”, he noted.
Obey further argued that petrol occupies a unique place in Nigeria’s economy because demand for it is largely inelastic.
“No matter how much the price is, people will still buy. It means you are taking money meant for other things just to buy fuel and keep your system running. It affects productivity, GDP and the entire economy.”
His position is partly supported by financial economist Dumebi Oluwole, who explained on Channels Television that lower international oil prices do not immediately translate into cheaper petrol because imported cargoes take time to arrive and existing inventories must first be exhausted.
The Federal Government has also acknowledged public concerns. The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, recently challenged marketers over the slow reduction in pump prices despite declining crude oil prices, saying current retail prices should better reflect prevailing international market conditions.
Looking beyond the immediate crisis, Obey believes Nigeria’s long-term protection against future global shocks lies in strengthening domestic refining.
He called for increased crude oil production, noting that much of Nigeria’s crude is already committed under existing supply contracts.
“Most of the crude oil produced in this country has already been tied to people we are going to supply. We don’t even have enough to give local refiners”, he revealed.
According to him, increasing production would enable government to allocate more crude to domestic refineries, including the Dangote Refinery and modular refineries, reducing dependence on imported fuel.
He also stressed the need to rehabilitate the country’s petroleum pipeline network.
“The pipeline system has collapsed. The only way products move now is by truck. If the pipelines were working, products could be pumped from the ports to different parts of the country. That would reduce transportation costs and make fuel cheaper.”
Beyond petroleum, Obey urged greater investment in alternative energy sources such as compressed natural gas and solar power to reduce pressure on petrol consumption.
Global developments suggest crude oil prices may remain relatively stable. Following the reopening of the Strait of Hormuz, Gulf producers increased exports, adding more supply to the international market and helping to moderate prices.
For millions of Nigerians, however, the issue is no longer what happens in the Middle East but when the benefits of lower global oil prices will finally be reflected at filling stations across the country.
Until then, many consumers will continue to believe that while petrol prices rise with remarkable speed during international crises, they take far longer to come down when those crises have passed in search of answers between ‘rocket versus feather’ economic models.
