In a space of three weeks, the price of premium motor spirit (PMS) or petrol almost doubled as it rose from below N800 per litre (at the pump) to over N1400 per litre in various locations across the country. While the commodity sold for about N798 per litre as of the last week of February 2026, by the last week of March, its price had hit N1400 per litre in some states of the country.
This surge in the price of PMS is of course one of the ripple effects of the raging war in the Middle East, which effectively commenced on February 28, 2026 when the U.S.-Israeli airstrikes hit Iran. The conflict has unleashed shocks on the energy supply chain: almost crippling exploration and production (E & P), stifling refining and distribution, and logistics. Practically every nation of the world is affected to some degrees.
Owing to Nigeria’s peculiarities and vulnerabilities, however, the raging conflict in the Middle East has resulted in consistently soaring prices of PMS, and virtually all refined products. Paradoxically, Nigeria, a leading crude oil producer, and member of the Organisation of Petroleum Exporting Countries (OPEC), has proven incapable of running its own refineries. Rather, the country, until a couple of years ago, depended almost a hundred percent on imported refined products.
Unfortunately, too, the management of crude oil production and sales has been riddled with corruption and malfeasance, such that instead of huge accretion to national wealth, the country keeps going a-borrowing. Huge portions of the country’s yet-to-be-produced crude oil have already been mortgaged — to borrow a lot of money — by the leadership of the country.
Today, even as most oil producing/exporting countries across the globe are reaping a windfall owing to the soaring crude prices, Nigeria is unable to increase its export volume; and has little or nothing to supply to local refiners. Some of these local refiners, especially the major one — Dangote Refinery — have had to resort to importing crude input from outside the country.
The sequel to this bizarre situation is that the Nigerian consumer of any refined product, especially PMS, bears the full brunt of the energy shocks at the global level. The current shock, though yet unfolding, is unleashing variegated hardship on Nigerians: purchasing power is crashing, standards of living are collapsing, foodstuff is going out of reach to many, cost of transportation and logistics has gone through the roof, etc.
As the country is a “generator economy”, and most economic agents depend on PMS and diesel for their livelihoods, the continuing soaring prices of fuel has forced on households and businesses, some scaling down or outright closures. Indeed, below this level is a huge chunk of the populace who are finding it extremely difficult to move around for their ‘daily bread’ due to the very high cost of transportation.
To all businesses, high cost of fuel translates to increased cost of operation, ultimately reflecting in high prices of their products — though unaffordable to many consumers (due to weakening purchasing power). Scaling down of production capacity, staff retrenchment and other cost-cutting strategies — all sum up to crippling productivity and economic growth. And this is the lot of Nigeria today!
Already, the country has sunk into something like the COVID-19 economic quagmire. As hunger and destitution begin a fresh wave in the land, President Bola Ahmed Tinubu has resorted to his usual strategy: distribution of palliative packages. Tactically integrated into his 2027 re-election campaigns, the president is distributing bags of rice (properly branded with his imprint cap) through his Renewed Hope Ambassadors — a supporters’ group.
By channelling the distribution of his rice palliative through a supporters’ group, it becomes obvious that the gesture is a mere political patronage that can only get to some members of his political party. What becomes the plight of the rest of the teeming hungry and angry Nigerians, even as their purchasing power keeps weakening, remains a critical question.
In the dire economic situation occasioned by soaring fuel prices, some sub-national governments have also joined the president in initiating some palliative measures. The other day, Oyo State governor, Seyi Makinde, announced that all workers in the state would be entitled to a N10,000 top-up on their salary for (an initial period of) three months. Governor Makinde said the allowance was necessary to cushion the effects of the soaring fuel prices, adding that “it will begin in April, with a possible extension, if the situation has not subsided.”
On his part, a critical oil sector stakeholder, Aliko Dangote, president of the Dangote Group, expressed fears that the fuel crisis was getting to a level that workers could no longer afford to go to work for five days in a week. Dangote, who spoke in Lagos after a meeting with President Tinubu, warned that the situation was fast degenerating to workers having to work from their homes, as is already the situation in some countries, and during COVID-19 pandemic.
Similarly, the organised private sector (OPS) and the Nigeria Labour Congress (NLC) have called for urgent government intervention as fuel prices have kept surging, raising fears of worsening inflation, job losses, and business closures. They suggested immediate relief measures such as tax incentives for local refiners, naira-based crude supply, and temporary subsidies, while fast-tracking reforms in the energy sector.
A comparative analysis of fuel price increases across the globe since the onset of the Middle East conflict shows that Nigeria comes second at 40 percent, after Vietnam (50 percent). The study conducted by Investor Sight (www.investorsight.co) shows that most developed economies recorded the lowest price increases: UK (3.5%), France (10%), Japan (2.5%), China (10%), etc. For Nigeria, as of today, PMS sells for the equivalent of one US dollar (i.e. N1400), given the ruling exchange rate at the Foreign Exchange (FX) market. In the U.S., the price is $0.75 per liter!
With this scenario, it becomes inescapable to infer that further degeneration of the fuel crisis is bound to plunge Nigeria into some worrisome economic doom. While other countries may have put in place some elaborate crisis management packages, it is yet to be clear where the government of the day in Nigeria is headed. Truly, palliatives are no solutions; or, has the oil price shock turned a death knell for Nigeria’s economy? Time shall tell!
- business a.m. commits to publishing a diversity of views, opinions and comments. It, therefore, welcomes your reaction to this and any of our articles via email: comment@businessamlive.com
Marcel Okeke, a practising economist and consultant in Business Strategy & Sustainability based in Lagos, is a former Chief Economist at Zenith Bank Plc. He can be reached at: obioraokeke2000@yahoo.com; +2348033075697
(text only)
The souls of our ancestors will now rest in peace!