Dangote Cuts Petrol Price Again: What Is Behind the Latest Reduction

Dangote Petroleum Refinery has cut its petrol price again, reversing part of the sharp increase it introduced earlier in September as international crude oil prices fell below $100 per barrel.

The refinery reduced its Premium Motor Spirit (PMS) price from ₦1,350 to ₦1,325 per litre, a ₦25 reduction, in Lagos.

The latest adjustment was not limited to Dangote. Several other marketers also reduced their depot prices across Lagos, Port Harcourt, Calabar and Warri, with some operators in Lagos cutting their prices by more than ₦20 per litre.

But the latest development is more than another change in the price of petrol.

It comes barely 11 days after Dangote raised its gantry price from ₦1,265 to ₦1,350 per litre, its fourth increase since August 21. That increase pushed the refinery’s petrol price up by ₦185 in 22 days.

So, what has changed in the market to trigger the latest reduction?

Crude oil prices have reversed

The immediate factor is the movement in the international crude oil market.

Brent crude fell below the $100-per-barrel mark, reaching about $99.77, while West Texas Intermediate (WTI) fell to $91.17. Brent had been around $109 a week earlier.

That movement matters to Nigeria’s downstream petroleum market even though the country now has a major refinery producing petrol locally.

Crude oil remains the primary raw material used to produce refined petroleum products. Changes in crude prices can therefore affect the economics of refining, while international crude and refined-product prices also influence the cost of imported fuel.

The recent fall has consequently created room for lower wholesale prices.

However, the global market remains volatile. Murban crude, for instance, moved in the opposite direction, rising to about $114.20 per barrel even as Brent and WTI declined.

That means the latest petrol reduction should be viewed within a market that is still moving rapidly rather than as the beginning of a guaranteed downward trend.

Why Dangote raised the price so sharply earlier

The latest reduction becomes more interesting when compared with what happened earlier this month.

On September 12, Dangote raised its petrol gantry price from ₦1,265 to ₦1,350 per litre.

That followed a series of increases beginning in August. The refinery moved from ₦1,165 to ₦1,185 on August 21, then to ₦1,200 on August 26, ₦1,265 on August 29 and finally ₦1,350 on September 12.

The increases occurred as international oil prices climbed amid supply concerns linked to the conflict involving the United States and Iran.

At the time, higher crude prices were feeding into the cost of petroleum products, with the effect eventually reaching Nigeria’s wholesale and retail markets.

Petrol pump prices subsequently rose in several locations. A survey published by PUNCH on September 13, for example, found petrol selling at ₦1,395 per litre at a Dangote-backed MRS station in Lagos, while other stations in Lagos and Ogun also adjusted their prices upward.

The latest cut therefore represents a partial reversal of that movement.

Local refining is changing the price equation

There is another reason the Dangote reduction matters.

Nigeria’s petrol market is no longer dependent solely on imported refined products. The Dangote refinery has become a major domestic source of petrol, meaning its wholesale price has become an important reference point for marketers.

Recent data from the Major Energies Marketers Association of Nigeria (MEMAN) showed that imported petrol had become more expensive than Dangote’s locally refined product.

As of September 17, Dangote’s gantry price was ₦1,350 per litre, while estimated import-parity prices were between about ₦1,364 and ₦1,365 per litre on the spot market. The seven-day average was higher at about ₦1,371.92.

With Dangote now cutting its price to ₦1,325, the gap has widened further in favour of locally refined petrol.

This could make domestic supply more attractive to marketers compared with importing petrol, particularly when international crude and foreign-exchange movements push up the cost of bringing refined fuel into Nigeria.

Will Nigerians immediately see cheaper petrol?

Not necessarily.

A reduction in the refinery’s gantry or depot price does not automatically translate into the same reduction at every filling station.

Retail petrol prices can vary according to transportation costs, location, operating expenses, stock purchased at an earlier price and individual marketers’ margins.

The latest depot figures illustrate that difference.

In Lagos, Dangote’s petrol was listed at ₦1,325 per litre, while other marketers were around ₦1,326 to ₦1,332. In Calabar, one marketer was selling at ₦1,320, while prices in Port Harcourt and Warri also varied.

PUNCH reported that petrol was still selling at roughly ₦1,370 to ₦1,450 per litre at retail outlets depending on location.

Therefore, motorists may see lower pump prices as filling stations replenish their stocks at the new wholesale rates, but the size and speed of any reduction will differ from one location to another.

What happens if crude prices rise again?

This is perhaps the bigger question for Nigerian motorists.

The recent price movement shows how quickly petrol prices can respond to changes in the international oil market.

Dangote’s experience in September provides a clear example. The refinery raised its gantry price by ₦85 on September 12 after crude prices climbed, only to reduce it by ₦25 after Brent fell below $100.

The refinery’s price movement also demonstrates that local refining does not completely insulate Nigeria from global oil-price volatility.

Domestic production can reduce dependence on imported petrol and lower exposure to import-related costs, but the crude used by refineries still has a value influenced by the international market.

Foreign exchange is another factor because the wider downstream market continues to be affected by the naira-dollar exchange rate and other costs associated with petroleum products.

What the latest Dangote cut means

For now, the latest reduction provides some relief at the wholesale end of the petrol market.

More importantly, it shows how closely Nigeria’s domestic fuel prices remain connected to movements in crude oil prices.

The reduction from ₦1,350 to ₦1,325 is relatively small compared with the ₦185 increase recorded between August 21 and September 12.

But it also comes at a time when locally refined petrol is already competing favourably with imported fuel on cost.

If crude prices remain lower, marketers could have more room to reduce wholesale and retail prices. If global oil prices rebound, however, the direction could change again.

For Nigerian consumers, the key issue will therefore be whether the latest fall in crude prices lasts long enough to translate into sustained reductions at filling stations.