Nigeria is bracing for another round of fuel price increases as Brent crude oil prices surged to an intraday peak of $126 per barrel on May 1, 2026, driven by escalating military tensions between Israel and Iran and the closure of the Strait of Hormuz to commercial shipping. The price spike represents a 47 per cent jump from the $85 per barrel average recorded in April, with significant implications for Nigeria’s energy import bill and transportation costs.
The Nigerian National Petroleum Company Limited has already adjusted petrol pump prices twice in April, with the landing cost of imported fuel expected to climb further if crude prices remain elevated. Market analysts warn that petrol prices could rise to between N1,500 and N1,800 per litre in the coming weeks, representing a 15 to 38 per cent increase from current levels of approximately N1,300 per litre. Diesel prices, which are fully deregulated and reflect international market movements, have already crossed N1,700 per litre in some locations, putting pressure on logistics and manufacturing costs.
The stark vulnerability stems from Nigeria’s continued reliance on imported refined products despite the start of operations at the Dangote Refinery. The 650,000-barrel-per-day facility has ramped up production but is yet to achieve full capacity due to upstream crude supply constraints. The lingering import dependence means that global oil price shocks transmit directly to domestic fuel prices, affecting every sector of the economy. Higher transport costs translate into higher food prices, as most consumer goods depend on road haulage.
From a fiscal perspective, higher crude prices increase government revenues from oil exports, but these gains are partially offset by higher under-recovery costs if the government continues to moderate pump prices. The removal of fuel subsidy in 2023 means that the pass-through of international prices to domestic consumers is more direct than in previous crises, providing no fiscal relief for households but preserving government revenue. Market analysts suggest that the government may need to consider targeted palliatives for the most vulnerable populations while allowing the fuel market to clear at higher prices. The central bank faces a policy dilemma, as higher fuel prices could reignite inflationary pressures just as monetary policy has started to gain traction.
