KEY POINTS
- Petrol prices have surged past N1,230 per litre, driven by rising global crude oil prices linked to Middle East tensions.
- Oil marketers face increased costs, heavy loan burdens, and shrinking profit margins, threatening business sustainability.
- Consumer demand has dropped sharply, while pricing pressures tied to replacement costs raise fears of potential fuel shortages.
Oil marketers across Nigeria are raising alarm over the mounting pressure on their operations following a sharp increase in petrol pump prices, a situation they attribute to the ongoing geopolitical tensions in the Middle East.
The crisis has significantly disrupted the downstream petroleum sector, with operators now grappling with escalating costs and shrinking profit margins.
Many marketers say the current pricing environment is no longer sustainable for their businesses, as the cost of acquiring petroleum products continues to rise while consumer demand weakens.
Cost of Supply Soars Amid Global Oil Price Rally
Recent developments in the global oil market have pushed crude oil prices above $104 per barrel, driven by heightened tensions involving the United States, Iran, and Israel.
This surge has directly impacted Nigeria’s petrol pricing, with pump prices jumping from an average of N839 per litre to over N1,230 per litre within weeks.
As a result, marketers now require significantly higher capital to purchase fuel. What previously cost around N50 million per truck has surged to between N60 million and N70 million, placing a heavy financial burden on operators who largely depend on bank loans to sustain their businesses.
Industry players say the rising cost of fuel procurement has intensified their reliance on credit facilities, which come with high interest rates.
The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, noted that although the cash turnover has increased due to higher prices, actual profits have dwindled.
According to him, the instability in pricing and continuous borrowing to meet supply demands are pushing many marketers to the brink.
