Petrol Price Hike Looms Over Oil Cuts by OPEC, Allies

Nigerians have been told to prepare for a possible rise in petrol prices as a result of additional four million barrels per day crude oil production cuts by the Organisation of Petroleum Exporting Countries and its allies.

This is happening as members of OPEC and its partners such as Russia recently cut production output in its ongoing Declaration of Cooperation by an additional 1.16 million barrels per day.

The group had a running 2mb/d cut before the latest cuts, bringing the total cuts to 3.66mb/d until the end of 2023.

The National Controller Operations of the Independent Petroleum Marketers Association of Nigeria, Mike Osatuyi, told The PUNCH that although such cuts would result in more revenue for Nigeria, higher crude oil prices would also mean an increase in pump prices of petrol.

“What this means is that the price of petrol will also shoot up locally,” he said, adding that “marketers await the swearing-in of the administration of Bola Tinubu on subsidy removal,” he said.

The outgoing administration of Major General Buhari had pushed forward the removal of petrol subsidies which had cost the country N12tn to the incoming administration.

While petrol currently sells at N185 per litre at outlets belonging to Major Oil Marketers Association of Nigeria and NNPCL Retail outlets and goes for over N200 at IPMAN filling stations.

The Chairman of IPMAN Satellite Depots, Akin Akinrinade, told The PUNCH that petrol prices would continue to rise as long as the country keeps importing.

“Nigeria still depends on importation. So, definitely, prices of petrol and other white products will rise until we are able to get our local refineries running,” he said.

Nigeria has been unable to meet its OPEC production quota of 1.8mb/d due to low production as a result of pipeline vandalism and oil theft in the Niger Delta.

Energy Expert, Ayodele Oni explained that the Federal Government would need to increase petrol subsidies to cushion the effect of the price rise in the international market.

According to financial analyst and the Chief Executive Officer of Cowry Asset Management Limited, Johnson Chukwu, although crude prices are now higher, Nigeria’s balance of trade will be greatly affected.

“Nigeria does not need to reduce its crude production because we have been unable to meet our OPEC quota. An increase in crude prices means an increase in petrol prices. The situation is not favourable to us at all,” he said.