Nigeria's oil market is exhibiting a baffling trend, with fuel prices rising despite a significant drop in global crude oil costs. This contradictory phenomenon has sparked concerns over the country's oil market dynamics, with experts and industry stakeholders struggling to make sense of the situation.

The global crude oil price has fallen to $65 per barrel, its lowest level since 2021, due to Donald Trump's import tariffs and a sudden increase in crude supply by OPEC+. However, in Nigeria, the ex-depot petrol price has increased by N40, from N860 to N900 per liter, despite the drop in global crude prices. This trend is puzzling, given that Nigeria is a crude oil-importing country and should benefit from the decrease in global prices.

The Crude Oil Refinery Owners Association of Nigeria (CORAN) has attributed the anomaly to the Nigerian National Petroleum Company (NNPC) Limited's insistence on forcing local refiners to purchase crude oil in dollars. According to CORAN, this policy is preventing the benefits of the global crude price drop from being passed on to Nigerian consumers. The organization argues that if crude prices continue to fall, petrol prices in Nigeria should drop significantly, potentially to as low as N350 per liter.

CORAN's Publicity Secretary, Eche Idoko, has stated that the naira-for-crude initiative, which was scrapped by the NNPC, is crucial to resolving the issue. The initiative allowed local refineries to purchase crude oil from Nigeria in the local currency, reducing the need for foreign exchange and logistics costs. Idoko believes that the absence of this initiative is contributing to the rising fuel prices in Nigeria, despite the global crude price drop.

The NNPC's decision to discontinue the naira-for-oil program has been criticized by industry stakeholders, who argue that it will further exacerbate the fuel price crisis in Nigeria. The program was introduced to promote local refining and reduce the country's dependence on imported petroleum products. However, the NNPC has reportedly forward-sold all its crude, citing production levels that are higher now than when the arrangement started almost six months ago.

The implications of this trend are far-reaching, with potential consequences for Nigeria's economy and energy sector. The country's oil market dynamics are already complex, with multiple stakeholders and interests at play. The current situation has sparked concerns over the government's ability to regulate the market and protect the interests of Nigerian consumers.

As the situation continues to unfold, industry stakeholders and experts are calling for a comprehensive review of Nigeria's oil market policies and regulations. The government must take steps to address the anomalies in the market and ensure that the benefits of the global crude price drop are passed on to Nigerian consumers. Failure to do so could have long-term consequences for the country's economy and energy sector.