Lagos depot owners have withheld sales across major depot hubs as the landing cost of Premium Motor Spirit (PMS) climbs to ₦1,311 per litre, with operators reassessing replacement costs and anticipating further pressure on petrol prices.
PetroleumPrice.ng gathered that several depots across key Lagos loading locations, including Coconut, Satellite Town and Dockyard, stopped PMS sales on Thursday as depot owners became increasingly reluctant to release existing stocks amid the sharp rise in the cost of securing replacement supplies.
The decision to withhold sales is largely linked to the widening replacement-cost pressure facing depot owners. They are unwilling to sell existing stocks at prevailing levels only to return to the market and purchase fresh supplies at a significantly higher cost.
The ₦1,311 per litre landing cost has therefore become a critical reference point in the latest market calculation, particularly as depot owners factor the cost of replacing their inventories into their pricing decisions.
The development has created a wait-and-see situation across major PMS depot hubs in Lagos, with depot owners holding available product while monitoring the direction of the market.
The expectation of a possible increase in PMS prices is also influencing the decision.
With the cost of bringing petrol into the market rising, depot owners are anticipating that any sustained increase in landing cost could eventually require corresponding adjustments further along the downstream supply chain.
For depot owners, selling now at existing levels could mean locking in transactions below the cost of replacing the same volume later. Holding the product provides room to reassess pricing once the market establishes a clearer replacement-cost benchmark.
The development should not, however, automatically be interpreted as an indication that petrol stocks have run out across Lagos.
Rather, the stoppage reflects a commercial response to rapidly changing cost expectations, as depot owners seek to avoid selling at prices that could expose them to losses when replenishing their stocks.
The pressure comes as international crude prices have surged, with Brent crude moving towards $105 per barrel amid renewed U.S.-Iran hostilities and heightened concerns over oil shipping and supply from the Middle East.
The international oil market is particularly important to the domestic downstream sector because higher crude prices can increase the cost of petroleum products and raise the replacement cost faced by traders.
The current Lagos development consequently highlights the growing importance of replacement economics in PMS pricing.
If crude prices remain elevated and the landing cost continues to rise, depot owners could face increased pressure to review their selling prices once normal depot transactions resume.
For now, however, the major concern among depot owners is preserving the value of their existing inventory while determining what it will cost to replace the product.
The withholding of PMS sales across key Lagos depot hubs therefore represents more than a temporary slowdown in transactions. It signals that depot owners are reassessing the market at a time when rising international crude prices are rapidly changing the economics of petroleum supply.
The direction of crude prices, future landing costs and the response of domestic suppliers will determine whether the current pause in sales develops into broader upward pressure on PMS prices.
Until then, Lagos depot owners are keeping their stocks off the market as they weigh higher replacement costs against the prospect of another increase in petrol prices.