Why Nigeria Oil Price Is On The High – Expert

RAYMOND OKOBIA

An oil and gas expert, Mr. Chinedu Okoronkwo, has attributed fluctuations in the pump prices of Premium Motor Spirit (PMS), popularly known as fuel, to volatility in the international crude oil market.

Okoronkwo, who is also the Treasurer, Board of Trustees, Independent Petroleum Marketers Association of Nigeria (IPMAN) said the current market price for Brent Crude oil is $96.28 per barrel, driven by the ongoing geopolitical conflict and tensions in the Middle East.

Pump price of fuel currently ranges between N1,299 and N1,350 in the FCT, following upward adjustments in the gantry (ex-depot) price by the Dangote Refinery which ranges between N1,265 and N1,290 per litre.

Okoronkwo said the current movement in crude oil prices was largely driven by speculation arising from the renewed tension and ongoing confrontation between the United States of America and Iran.

He said statements from both sides of the conflict could trigger movements in crude prices as traders respond to market sentiments and expectations.

“The traders are now dealing on speculations. The sentiment is basically on the American and Iranian confrontation.

“Any statement, even if there has not been any actual development, appears to trigger movements in the market,” he said.

On frequent adjustments in the price of fuel by the Dangote Refinery, Okoronkwo said the refinery was operating as a business and would naturally respond to anticipated changes in crude prices.

According to him, the refinery considers market forecasts and the likelihood of increases in crude prices when determining the price of its petroleum products.

Okoronkwo said that the refinery also needed to recover the huge investments made in establishing the facilities.

He said the situation could persist until other strong refineries emerged to provide competition in the downstream petroleum market.

He said increased competition in the refining sector would provide consumers and petroleum marketers with more options.

“By the time we have another strong refinery challenging what these ones are doing now, one man will not stress the system,” he said.

On fuel subsidy removal, the IPMAN BoT Treasurer said subsidy was not necessarily a crime but said that government must ensure that savings from its removal were properly utilised.

He said the major benefit Nigerians had so far experienced from subsidy removal was improved availability of petroleum products and the disappearance of long queues at filling stations.

“If you remove subsidy and use the money to provide buses, improve roads and make life more comfortable, people will not remember subsidy,” he said.

He urged the government to channel the funds saved from subsidy removal into critical sectors such as healthcare, agriculture, education and road infrastructure.

According to him, improved public services and living conditions would make Nigerians less concerned about the removal of fuel subsidy.

He, however, opposed the reintroduction of the type of subsidy previously operated in the country, saying the funds saved from its removal should instead be properly deployed.

“For me, reintroduction of the type of subsidy we had at that time will not be the best for this country.

“But I think the money gotten from this one should be utilised properly, especially in health, agriculture and education,” he said.