…Historical Price Dynamics Put PMS Around N960/Litre
…Trump Orders Probe Into Alleged U.S. Gas Price Gouging
The sharp decline in global crude oil prices following the ceasefire agreement that ended months of hostilities between the United States and Iran has renewed questions over why petrol prices in Nigeria remain around N1,200 per litre despite the easing of pressures that had pushed up energy costs during the conflict.
THE WHISTLER reports that Brent crude, the international benchmark against which Nigeria’s Bonny Light is priced, has fallen to around $70 per barrel from a peak of about $126 recorded during the height of the conflict, representing a decline of more than 42 per cent.
The latest oil price slump has effectively erased the war premium that had built into the market amid fears that hostilities could disrupt supplies passing through the Strait of Hormuz, a critical shipping route through which nearly one-fifth of the world’s crude and liquefied natural gas shipments transit.
The three-month conflict, which began on February 28, 2026 sent shockwaves through global energy markets as traders feared a blockade of the strait and a possible escalation involving Gulf producers.
The uncertainty pushed crude prices sharply higher, with Brent crude climbing from around $68 per barrel before the crisis to above $120 and peaking near $126 per barrel in April.
The rise translated into higher prices for refined products worldwide and put upward pressure on petrol prices in importing countries, including Nigeria.
Before the outbreak of the conflict, petrol sold for between N830 and N900 per litre across much of Nigeria.
As crude prices surged by approximately 85 per cent, pump prices climbed to around N1,360 per litre, representing an increase of about 54 per cent.
However, while crude oil has surrendered much of its war-induced gains, domestic petrol prices have been far slower to follow suit.
Analysts say the discrepancy highlights an asymmetry that has long characterized fuel markets globally where prices rise like rockets when crude increases but descend like feathers when oil prices retreat.
The de-escalation of tensions and diplomatic efforts between Washington and Tehran have eased concerns over supply disruptions, leading to a broad sell-off in oil markets.
Additional downward pressure came from expectations that Iranian exports could return more fully to international markets and that shipping through the Strait of Hormuz would normalize.
Concerns about weaker global demand and rising output from non-OPEC producers have also contributed to the decline.
As a result, Brent crude has retreated to levels last seen before the outbreak of hostilities.
Although the easing of tensions prompted Dangote Petroleum Refinery to slash its ex-depot price by N75 per litre from N1,250 to N1,175 effective June 16, retail prices have remained around ₦1,200 per litre in many parts of Nigeria.
The refinery attributed the reduction to improved market fundamentals following the de-escalation of tensions in the Middle East.
It also lowered its coastal supply price from N1,595,790 to N1,495,215 per metric tonne, reducing procurement costs for marketers.
The move strengthened expectations that pump prices would decline further.
Historical price transmission patterns suggest they should.
Based on THE WHISTLER analysis, when crude prices climbed from $68 to $126 per barrel, an increase of about 85 per cent, petrol prices rose from roughly N850 to N1,300 per litre, a rise of about 53 per cent.
Using the same transmission mechanism, the current decline in crude prices of more than 41 per cent should ordinarily place petrol prices between ₦900 and ₦1,000 per litre.
A simple proportional calculation would imply an even lower price of below ₦800 per litre.
However, analysts caution that crude oil accounts for only part of the final cost of petrol.
Findings by THE WHISTLER further revealed that exchange rates, shipping charges, storage costs, transportation expenses, dealer margins and taxes all influence the retail price.
Even after accounting for these variables, energy experts say PMS should realistically retail around ₦1,000 per litre.
The issue is not peculiar to Nigeria. In the United States, President Donald Trump has ordered the Department of Justice to investigate major oil companies over allegations that they are failing to reduce pump prices in line with falling crude oil costs.
In a post on Truth Social on Wednesday, Trump accused oil companies of exploiting consumers.
“The big Oil Companies are not dropping their price at the pump commensurate with the sharply lower prices they are paying for Oil. Those prices are dropping like a rock! In other words, customers are being ‘gouged’,” Trump wrote.
“I have instructed the DOJ to immediately start looking into this. Gasoline prices better start going down a lot faster than what I’m seeing!” he added.
The order came as West Texas Intermediate crude fell below $70 per barrel for the first time since March, while Brent crude settled around $73.83 per barrel.
The American Petroleum Institute rejected allegations of price manipulation, arguing that retail fuel prices do not instantly mirror changes in crude oil prices because refining costs, inventories and supply chain dynamics influence final prices.
Analysts describe this phenomenon as the “rockets and feathers” effect.
In Nigeria, marketers have similarly attributed the slow pace of reductions to inventories purchased at higher prices, exchange-rate volatility and logistics costs.
