• Signals fresh cost pressures in downstream market
• OPEC may consider production raise for September

Fresh inflationary pressures may be building in the downstream petroleum market as diesel depot prices have begun to rise across major supply hubs, following a sharp rebound in international crude oil prices, with Brent crude climbing to nearly $90 per barrel amid renewed geopolitical tensions in the Middle East.

Market checks by The Guardian yesterday showed that depot owners had begun raising the loading prices of Automotive Gas Oil (AGO), commonly known as diesel.

As of 2:50 p.m. WAT, Brent crude traded at $89.54 per barrel, representing a 6.48 per cent increase, while U.S. West Texas Intermediate (WTI) gained 6.32 per cent to $84.27 per barrel, reversing part of the steep losses recorded earlier in the week.

The rebound has already filtered into Nigeria’s diesel market, with ex-depot prices increasing across several major distribution centres.

The Guardian gathered that Ibeto, Integrated, Ibachem, Gulf Treasure, Duport, African Terminal and T.Time depots in Lagos all sold diesel at N1,650 per litre, while Sigmund Depot in Port Harcourt raised its loading price to N1,670 per litre.

The renewed increase in diesel depot prices underscores the vulnerability of Nigeria’s productive sectors to volatility in the international oil market.

However, with manufacturers, transport operators, telecommunications firms and other businesses relying heavily on diesel to offset unreliable electricity supply, sustained increases in fuel costs are expected to raise operating expenses across the economy.

The latest movement also reinforces the strong correlation between global crude prices and domestic diesel prices in Nigeria’s deregulated downstream market, where marketers largely adjust ex-depot prices in line with international replacement costs.

The upward adjustment comes only days after depot operators maintained stable diesel prices despite a sharp decline in global crude oil prices, suggesting that marketers are responding more quickly to rising international replacement costs following the latest surge in oil prices.

Meanwhile, the Organisation of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, are preparing to endorse one more production increase for September and then put the monthly quota parade on hold through the end of the year.

Under the arrangement, Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman are expected to raise their combined September target by about 188,000 barrels per day when they meet on August 2. That would match the increases announced for June, July and August.

It was gathered that the current production targets would remain in place from October until new quotas take effect in January 2027. No final decision has been made.
 
The pause would, however, leave another two million bpd of group-wide cuts in place through the end of 2026.