Professor Emeritus Wumi Iledare, an expert in petroleum economics, has clarified why local fuel costs do not immediately mirror drops in international crude oil prices. Responding to public pressure for lower pump prices, Iledare noted that the link between raw crude and refined fuel is not instantaneous.
As Brent and West Texas Intermediate crude prices returned to levels seen before the Middle East conflict, Nigerians have pushed for a return to pre-crisis fuel rates. Currently, pump prices in Abuja range between N1241 and N1305, despite the Dangote Refinery recently lowering its wholesale price to N1125 per litre.
Iledare explained that fuel pricing typically follows a pattern of asymmetric transmission, where cost increases are passed on rapidly, while decreases occur more slowly. He highlighted that existing inventories purchased at higher costs must be sold first to prevent financial instability for marketers. Furthermore, he emphasized that in Nigeria, the exchange rate of the naira is a vital factor. Because petroleum inputs are dollar-denominated, a weaker naira can negate the benefits of cheaper crude oil.
The expert also pointed out that refining margins, global demand, and logistics play significant roles independent of crude costs. Under the Petroleum Industry Act, he noted that market forces rather than government mandates should dictate pricing. He concluded that long-term price relief for Nigerians relies on structural improvements such as currency stability, expanded domestic refining, and consistent policy, rather than just reacting to short-term shifts in global crude markets.
