Nigeria: Diesel to trade near N1500/litre as oil prices increase

The Federal Government will incur more subsidies on premium motor spirit (PMS), otherwise called petrol, in the coming weeks as the price of crude oil price, jumps to a record high of $97 per barrel.

Manufacturers and business owners may also witness an exponential rise in their cost of production as the prevailing situation may push the price of diesel and aviation fuel to near $1500 per liter.

Oil price has maintained continuous rise and witnessed an increase of about four per cent yesterday as Brent traded for about $97 barrels to keep the hope of analysts who believe that the commodity would soar past $100 per barrel on track.

The windfall at the international market in Nigeria and its development remains a concern owing to the country’s inability to pump enough crude oil as well as total dependence on importation for petroleum products. The situation usually erodes every gain made from crude oil.

Seeing the sustained rise in the product the government reverted to the scheme using the supposed commercialized Nigerian National Petroleum Company Limited to manage the market shocks and maintain monopoly of the downstream segment of the nation’s oil and gas industry.

Nigeria consumes approximately 19.5 billion liters of petroleum products yearly, with about 99 percent of that consumption being Premium Motor Spirit (PMS), while diesel and aviation fuel make up only about one percent.

While Russia had already closed its borders against export of diesel, a development that would keep significant volume from the market, oil traders are reportedly mopping up crude as Saudi Arabia and Russia announced an extension of their 1.3-million-bpd combined supply cut, and traders stopped obsessing over demand in China.

Source: guardian.nigeria