Nigerians could face higher petrol prices as the NNPC steps back from its intermediary position.

 Petrol prices are expected to rise once more following the Nigerian National Petroleum Company Limited's (NNPCL) decision to terminate its exclusive offtake agreement with Dangote Refinery. This change allows other marketers to purchase fuel directly from the facility.

The current price of fuel was implemented in August when the NNPCL increased the pump price from N568 to N855 per litre in Lagos, with prices approaching N900 in other regions. With the NNPCL stepping away from its role as a middleman for Dangote Refinery, it will no longer bridge the price difference between the refinery's rates and what retailers charge, having previously absorbed a subsidy of N133 per litre.

This move by the NNPCL marks a significant step towards a fully deregulated oil market. Marketers can now negotiate petrol prices directly with Dangote under a "willing buyer, willing seller" framework, similar to how other deregulated products like diesel and kerosene are handled.

In September, Devakumar Edwin, Vice President at Dangote Industries, mentioned that the refinery, capable of processing 650,000 barrels per day, had begun refining petrol, initially with the NNPCL as the sole off-taker. However, recent changes now permit independent marketers to engage directly with Dangote.

An NNPCL official remarked to Premium Times, "We can no longer continue to bear that burden," emphasizing the financial pressure from the subsidy system.

Experts warn that rising tensions in the Middle East could lead to increased petrol prices in Nigeria and elsewhere. Oil prices have seen gains, with Brent nearing $80, building on last week's significant rise, which was the largest weekly increase since early 2023.

This increase is attributed to concerns over potential wider conflicts in the Middle East and possible disruptions to exports from this key oil-producing region. Brent crude futures climbed $1.09 (1.4 percent) to $79.14 a barrel, while the U.S. West Texas Intermediate (WTI) crude futures rose $1.15 (1.55 percent) to $75.53, having previously surged by over $2. Last week, Brent rose more than 8 percent, while WTI soared 9.1 percent amid fears that Israel may target Iranian oil infrastructure following a missile attack on October 1.