Brent crude has climbed sharply by 3% to $67.57 per barrel, and the impact is already being felt in Nigeria’s downstream petroleum market. For industry players, this is not just another movement on the global oil chart; it is a clear signal that depot prices may soon come under upward pressure, especially as crude edges closer to the $68 per barrel mark.
In Nigeria, where the bulk of refined petroleum products are still influenced by international market pricing, any sustained rise in Brent crude quickly reflects in landing costs and, ultimately, in depot and pump prices.
Why the 3% jump in Brent crude matters
The latest rally in Brent crude is driven by tightening global supply and stronger demand expectations. Production discipline among major oil-exporting countries and disruptions in some producing regions have reduced the volume of crude available to the market. At the same time, refiners are increasing crude intake ahead of peak consumption periods, particularly for petrol and aviation fuel.
For Nigeria, this development is significant because international crude prices determine the base cost of imported petrol and diesel. As Brent crude moves closer to $68 per barrel, marketers say depot prices are likely to rise in response to higher landing costs.
Industry operators have consistently warned that once crude prices approach the $68 benchmark, the cost of products at the depot level will move up, unless there is a strong offset from exchange rate stability or reduced freight charges.
A look at Nigeria’s depot market and price behaviour
Over the past two years, Nigeria’s depot market has been marked by sharp price swings. Since the removal of petrol subsidy, depot prices have become fully exposed to market forces, reacting swiftly to changes in crude oil prices, foreign exchange rates and domestic supply conditions.
There have been periods when Brent crude traded above $80 per barrel, pushing depot prices sharply higher as landing costs rose. At such times, ex-depot prices increased across major coastal depots in Lagos and Calabar, with immediate effects on pump prices nationwide.
On the other hand, when Brent crude softened to the $60–$65 range, depot prices moderated as import costs fell and competition among depot owners intensified. Local supply interventions, including price adjustments by domestic refiners, also forced depots to reduce rates to remain competitive.
Beyond crude prices, local market factors have played an important role. Increased demand during festive seasons, supply disruptions at jetties and rising haulage costs have all contributed to temporary price spikes. In contrast, periods of stable supply and aggressive price competition have produced brief relief in depot pricing.
These trends show that depot prices in Nigeria are shaped by both global and local realities, with crude oil prices acting as the dominant influence.
Why crude oil makes up about 80% of landing cost
Market data indicate that crude oil accounts for about 70 to 80 per cent of the total landing cost of petrol and diesel in Nigeria. This is because the international price of crude determines the value of refined products before they are shipped into the country.
The remaining 20 to 30 per cent of landing cost comes from freight charges, marine insurance, port fees, financing costs and domestic handling expenses. While these costs are important, they do not move prices as strongly as crude oil itself.
This cost structure explains why even a modest rise in Brent crude has a strong impact on depot prices. A 3 per cent increase in crude raises the base price from which all other costs are calculated. When this is combined with a weak naira and high shipping costs, the pressure on depot prices becomes even stronger.
As Brent crude now trades close to $68 per barrel, import parity models suggest that landing costs will rise further. Depot owners, who price products based on these costs, are therefore likely to adjust ex-depot rates upward in the coming days if the trend continues.
What to expect in the coming days
With Brent crude now on a stronger footing, the short-term outlook for Nigeria’s depot market points towards higher prices. Unless there is a sharp reversal in crude prices or a significant improvement in the exchange rate, depot operators will have little room to absorb higher landing costs.
Although competition among depots and increased local refining may slow the pace of increases, the structure of Nigeria’s fuel market means that global crude oil trends will continue to dictate domestic pricing.
In practical terms, the latest jump in Brent crude reinforces a familiar pattern in Nigeria’s fuel market: when crude prices rise, depot prices follow. With crude now approaching $68 per barrel, the likelihood of higher depot prices is increasing, putting renewed pressure on fuel costs across the country.