M-East war: CPPE, others warn of further surge in fuel prices, inflation

…As oil hits $146/barrel
By Udeme Akpan & Ediri Ejor

There were growing concerns yesterday that the price of Premium Motor Spirit, PMS, also known as petrol, may rise further as crude oil climbed to $146.4 per barrel from $120, representing a 21 per cent increase, driven largely by the ongoing United States–Iran conflict.

Crude oil remains a critical feedstock for refining, with significant implications for operating costs across the midstream and downstream segments of the petroleum industry.

Market data showed that while Brent crude rose to $112.2 per barrel from $110, and Nigeria’s Bonny Light increased to $114 from $112.20, the Murban crude benchmark surged by 12 per cent to $146.4 from $120 in the global oil market.

In his immediate reaction to the development yesterday, President of the Petroleum Products Retail Outlets Owners Association of Nigeria, PETROAN, Dr Billy Gillis-Harry, said: “As long as the war persists, crude oil prices will continue to fluctuate, leading to instability in petroleum product prices across countries, including Nigeria.

‘’ However, Nigerians should not panic, as panic-buying will worsen the already difficult situation.”
Also speaking, a Professor of Petroleum Economics, Wumi Iledare, noted: “The Iran tension has pushed global crude prices up by roughly 7–10 per cent or more. In import-dependent markets like West Africa, such shocks typically translate into a 5–8 per cent increase in petrol prices, as refined products quickly track crude movements.

“However, with the Dangote Refinery processing domestic crude, part of the global price escalation can be absorbed through logistics savings, freight elimination, and supply smoothing — potentially dampening about 20 per cent of the price shock.”

Similarly, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, CPPE, Dr Muda Yusuf, warned that rising energy costs could worsen inflationary pressures in the country.

He said: “Food, transport, and energy costs continue to rise at a pace that erodes purchasing power. Real incomes remain under severe strain, particularly for vulnerable and urban households. ‘’Disinflation, in this context, simply means a slower rate of price increases—not a reduction in the cost of living.

“Energy, logistics, and raw material costs remain elevated, while weak consumer demand limits pricing flexibility. This is squeezing margins, reducing profitability, and increasing business vulnerability, particularly in consumer-facing sectors.”

He identified escalating geopolitical tensions in the Middle East, particularly involving Iran, Israel, and the United States, as the most immediate threat to Nigeria’s inflation outlook.

“The conflict has already triggered a surge in crude oil prices above $100 per barrel, amid disruptions to energy infrastructure and increased risks to global supply routes, including the Strait of Hormuz.

“For Nigeria, the transmission channels are direct and profound—higher petrol and diesel prices, increased transportation and logistics costs, rising production costs, exchange rate pressures, and escalating food prices.

“Heavy reliance on petrol and diesel for power generation, due to unreliable electricity supply, creates a strong and immediate pass-through from global oil prices to domestic inflation.

“Estimates indicate that unreliable electricity imposes annual economic losses of between N7 trillion and N10 trillion, while spending on generators exceeds n3.7 trillion annually,’’ Yusuf added.

He urged fiscal and monetary authorities to remain cautious, adding that “the resurgence of inflationary pressures and external shocks make premature policy easing risky.

‘’Oil revenue windfalls should be managed prudently, with a focus on strengthening foreign exchange reserves and supporting productive sectors.

“A proactive, coordinated and forward-looking policy response is imperative to safeguard macroeconomic stability and protect citizens from worsening economic hardship.”

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