Petrol Prices May Drop Below ₦1,000 as Strait of Hormuz Reopens After Ceasefire
The reopening of the Strait of Hormuz, following a ceasefire agreement in the Middle East, is anticipated to stabilize global oil markets and lead to a gradual reduction in petrol prices in Nigeria. Experts predict that prices could potentially fall below ₦1,000 per litre, although immediate relief at the pumps is not expected.
Gradual Price Adjustments Expected
Analysts emphasize that while declining global crude oil prices may influence Nigeria's downstream petroleum sector, any reductions in pump prices are likely to occur slowly. If market forces are allowed to operate fully, prices could settle around ₦1,000 per litre. Industry experts and oil marketers, interviewed separately in Abuja, noted that the ceasefire involving the United States, Iran, and Israel has restored confidence in global oil supply chains. However, they cautioned that domestic price adjustments will take time to materialize.
Expert Insights on Market Stabilization
Dayo Ayoade, an energy law expert at the University of Lagos, described the truce as a short-term stabilizer that can ease disruptions which recently drove crude oil prices higher. He stated, "What we can expect is that oil markets would react positively. We should see gradual normalisation of oil prices as tankers resume movement through the Strait." Ayoade explained that the reopening of this critical shipping corridor will boost investor confidence and restore the steady flow of commodities across global markets, alleviating disruptions in sectors such as fertilizers, aviation fuel, and food supply chains.
However, Ayoade highlighted a mixed outcome for oil-producing nations like Nigeria, which may experience a decline in revenue as crude oil prices drop. Regarding domestic pricing, he stressed that reductions in petrol prices will not be immediate. "There would be a price drop, but it will take time to reflect locally. Within two to three weeks, if the ceasefire holds, we should begin to see gradual normalisation," he added.
Local Market Dynamics and Projections
Olatide Jeremiah, Chief Executive Officer of Petroleumprice.ng, noted that although global oil prices have started to decline by about 11 percent, local marketers may delay passing the benefits to consumers. "Depot and retail prices are expected to drop, but there are concerns that reductions may not be reflected promptly," he said, adding that petrol prices could fall below ₦1,000 per litre if current trends persist.
Similarly, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) projected a potential drop from the current ₦1,261 per litre to below ₦1,000. Joseph Obele, its Publicity Secretary, stated that petrol prices could even decline to around ₦900 per litre if market stability is sustained. "With the reopening of the Strait of Hormuz, Nigerians should expect a significant reduction in petrol prices," he said, urging the Nigerian National Petroleum Company Limited to fast-track refinery operations, including the Port Harcourt refinery, to further reduce dependence on imports.
Obele also called on marketers to adjust pump prices in line with actual costs, especially when new, cheaper stock becomes available. Muda Yusuf, founder of the Centre for the Promotion of Private Enterprise, echoed that consumers should expect relief within weeks, although existing inventory purchased at higher prices may delay immediate reductions. "We should begin to see the impact in the coming weeks if the ceasefire is sustained," he said.
Cautions and Broader Implications
Economist Sheriffdeen Tella cautioned that improved oil supply conditions do not automatically translate into immediate price cuts in Nigeria's domestic market. Global oil markets had surged earlier following disruptions to shipping through the Strait of Hormuz, which accounts for roughly one-fifth of global oil supply.
Confirming the reopening, Iran's Foreign Minister, Abbas Araghchi, said the waterway would remain open to commercial shipping for the duration of the ceasefire. In reaction, former U.S. President Donald Trump welcomed the development, although he indicated that restrictions on Iran would remain pending a broader agreement.
Meanwhile, Aliko Dangote, President of the Dangote Group, warned that continued oil price volatility could impact key sectors, including aviation and agriculture, noting a sharp rise in fertilizer costs in recent months. Energy analysts say the crisis underscores the vulnerability of global oil supply routes and may accelerate investment in alternative pipelines, as well as the global shift towards renewable energy.
The Strait of Hormuz remains one of the world's most strategic oil transit routes, linking the Persian Gulf to international markets. Disruptions in this corridor often trigger sharp increases in crude oil prices and have widespread economic effects globally.
