Petrol prices have remained relatively stable across several African countries despite rising global crude oil prices triggered by tensions in the Middle East, except in Nigeria, where pump prices have witnessed a steep increase of 47 per cent in the past 10 days.

However, following the emergence of Mojtaba Khamenei as Iran’s new supreme leader, oil prices climbed to about $116 per barrel, while U.S. West Texas Intermediate (WTI) traded above $108 in the early hours of yesterday before retreating to $94.77 per barrel while Brent closed at $89.45 as of press time.

The rally represents one of the sharpest weekly increases in recent years and has intensified pressure on fuel markets globally, similar to what forced many economies to resort to energy subsidies at the start of the Russia-Ukraine war.

Yesterday, markets reacted to comments from Donald Trump suggesting the U.S. conflict with Iran could soon wind down.

In a phone interview with CBS News, Trump said the military operation was “very complete” and running well ahead of its initial four- to five-week timeline, adding that Iran had effectively lost its navy, communications and air force.

The remarks appeared to calm markets after days of geopolitical tension that had driven crude prices sharply higher. U.S. equities also rebounded, with the S&P 500 and the Nasdaq Composite both rising more than 1% after earlier losses, as investors bet the conflict may not escalate further.

Data compiled across major African markets showed that while regulatory buffers, pricing windows and targeted interventions have helped to stabilise prices in countries such as South Africa, Kenya, Sierra Leone, Namibia, Uganda, Angola and Ghana, Nigeria’s largely market-driven pricing framework has allowed rapid adjustments as refiners respond to a spike in global crude prices.

Retailers are also taking advantage of the chaotic adjustments, with product hoarding and arbitrary charges. In Lagos, some filling stations were dispensing the product for as much as N1,400 per litre, about 17 per cent above the N1200 mainstream outlet sold.

The spike, which is currently unsettling prices of essential commodities and services, such as transport, has raised concerns about the quality of regulation in the downstream sector, commitment to consumer protection in the face of market upheaval and the government’s capacity to control rent-seeking behaviour in the deregulated market.

A few analysts said the government may need to weigh the possibility of channelling part of the crude sale windfalls to provide some support, a suggestion that recreates subsidies.

Whereas crude current trade is around $85 per barrel or about 40 per cent above the 2026 budget benchmark, the country is way behind the two million barrels per day target. What the government loses to under-production, it gains in essence prices, suggesting the windfall is more of an illusion.

Still, the budget is riddled with what many analysts have described as unrealistic non-oil revenue expectations that could push the actual fiscal deficit far above the projected N23.85 trillion.

And for a country that has consistently spent over 50 per cent of its revenue on debt service amidst zero funding of its sinking fund, reinventing fuel subsidy in whatever form may be the last option before the Federal Government, as citizens wallow through a war-triggered fuel crisis.

Coming less than a year to the next general election, when President Bola Tinubu could be seeking re-election, economic rationalisation faces its own constraint. The government had previously relaxed policies considered as economically appropriate to embrace populist views to gain a political edge.

Whereas Tinubu has shown commendable commitment to the reforms he instituted in less than an hour in office, his life revolves around politics – a reason some analysts suggested he could bite the bullet as the country enters election season. The current crisis may test the President’s resolve.

Less than two weeks into the Iran-Israel/U.S. conflict, Nigerians had to get along with the heavy burden of war. In Abuja, the seat of power, petrol prices rose from N875 per litre in the past 10 days to about N1,285 per litre, following a series of re-pricing by the Dangote Petroleum Refinery.

The refinery has revised its ex-depot prices for the third time since March 2, increasing the gantry price of motor spirit to N1,175 per litre. Automotive gas oil (AGO) or diesel was raised to N1,620 per litre.

The latest increase represents a sharp jump from the previous ex-depot price of N995 per litre for petrol and N1,430 per litre for diesel, reinforcing the upward trend in domestic fuel pricing.

The adjustments have pushed pump prices to about N1,200 per litre in Lagos, N1,250 in Ibadan and as high as N1,285 per litre in Abuja.

The rapid adjustments highlight structural weaknesses in Nigeria’s downstream regulatory system, particularly at a time when global oil markets are experiencing extreme volatility.

Despite the current international shock, many African countries have managed to cushion the immediate impacts using different stabilisation mechanisms, while the Federal Government, as at press time, kept mute on its plans to cushion the rising impacts. Spokesperson to the President, Bayo Onanuga and the Minister of Information, Mohammed Idris, did not respond to questions over the government’s plans on cushioning the rising impacts on households.

Despite deregulation, in South Africa, petrol prices are regulated under a structured pricing formula that determines monthly adjustments. Currently, South Africa is preparing to bear some burden should crude oil rise to $120 per barrel. The government is expected to bear the country’s petrol price under-recovery of around R5.4 per litre, while diesel could face a R10 per litre gap.

Similarly, Kenya operates a regulated price window that shields consumers from abrupt fluctuations. The country’s fuel prices are reviewed once a month by the Energy and Petroleum Regulatory Authority.

The current retail price of super petrol stands at 178.26 Kenyan shillings per litre, while diesel sells for 166.54 shillings. Kerosene has even recorded a slight reduction to 152.78 shillings per litre.

The next review is scheduled for March 14, when prices may rise modestly. Market intelligence suggests petrol could increase by about six shillings per litre, while diesel may rise by roughly three shillings.

Despite removing major fuel subsidies in September 2022, Kenya continues to apply targeted and temporary support measures. Authorities are also considering the use of the Petroleum Development Levy to cushion consumers if Middle East tensions persist.

In Ghana, fuel prices are adjusted under a bi-monthly pricing window. Prices are reviewed on the 1st and 16th of each month, allowing a predictable system that moderates sudden shocks.

Petrol in Ghana was selling at 10.24 cedis per litre in late February, rising slightly to 10.46 cedis per litre in early March, reflecting modest adjustments rather than rapid spikes.
Other African markets have also maintained relative stability. In Namibia, petrol has remained around 20 Namibian dollars per litre, while diesel trades at about 21 Namibian dollars.

In Uganda, pump prices have largely remained unchanged despite the global price rally.

In Sierra Leone, petrol prices increased from NLe28.5 per litre to NLe32 per litre on March 7, representing a moderate 12.3 per cent upward adjustment compared with the steep rise recorded in Nigeria.

Angola, despite gradually reducing subsidies to ease fiscal pressure, maintains some of the lowest petrol prices globally, with fuel selling for about 300 kwanza per litre, equivalent to roughly $0.33 (N450 per litre).
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A downstream expert, Jide Pratt, said most African countries have structured pricing frameworks designed to prevent immediate transmission of global price shocks to consumers.

“In Kenya, for example, the regulator publishes a maximum retail price every month, and that price stays in place for 30 days.
“What that means is that even if international prices fluctuate within that period, consumers are protected until the next review cycle,” he said.

According to him, Ghana operates a similar mechanism, with prices determined through transparent international benchmarks.
“These systems create a buffer mechanism that protects consumers from immediate price shocks,” he said.

Nigeria, however, has moved towards a more liberalised framework in which prices respond quickly to market signals.

“In the past, the national oil company played a stabilising role in supply. But today, the market appears to be largely influenced by a single refinery acting as the price leader,” he said.

He warned that rapid price increases could trigger a wider inflationary shock across the economy.

“When fuel prices increase suddenly, transport operators immediately face higher operating costs, and those costs quickly spread to food prices and other goods,” he said.

Another factor driving price increases is the concept of replacement cost in fuel marketing, as operators now follow super refineries like the Dangote Refinery, which often adjust prices based on the anticipated cost of replacing current stocks rather than the price at which those stocks were purchased.

An economist at the University of Nigeria, Prof. Emmanuel Nwosu, said rising crude oil prices present both opportunities and risks for Nigeria.

“This is not the first time crude oil prices have exceeded $100 per barrel. For Nigeria, it presents two sides of a coin.

“The first is that it provides an opportunity to increase government revenue and support the budget, provided crude production remains stable,” he said.

However, he warned that the benefits could be offset by rising domestic fuel costs.

“Higher pump prices affect transportation, food prices and overall inflation, which can create significant social pressure,” he added.

A stakeholder and energy analyst, Kaase Gbako, noted that Nigeria’s transition to a market-reflective fuel pricing regime means increases in crude oil prices will naturally translate to higher pump prices.

He pointed to the recent gantry price adjustment announced by the Dangote Petroleum Refinery as evidence of the impact.

According to him, the government’s focus should be on ensuring policy stability and transparency in the fuel pricing framework rather than restoring petrol subsidies.

He warned that bringing back subsidies would be costly for the government and could reverse the policy gains achieved since their removal.

Gbako added that several African economies that depend on imports from the Middle East may face higher fuel costs, pressure on foreign reserves and rising inflation if the crisis persists.

A partner at Kriston Pedabo, Olufemi Idowu, warned that the recent rise in global crude oil prices to about $116 per barrel may not translate into immediate economic gains for Nigeria due to the country’s heavy reliance on imported refined petroleum products.

Idowu said that while higher crude prices should ordinarily boost government revenue, households and businesses are more likely to feel the impact through rising fuel and transportation costs.

He cautioned against a blanket return to petrol subsidies, describing them as fiscally unsustainable. Instead, he urged the government to provide targeted relief to critical sectors while accelerating domestic refining capacity and diversifying energy sources.

According to him, the Nigerian National Petroleum Company Limited could explore contract manufacturing arrangements with the Dangote Petroleum Refinery to improve access to locally refined fuel.

Idowu added that across Africa, fuel-importing economies may face higher inflation, while subsidy-dependent countries risk deeper fiscal deficits if oil prices remain elevated.

Meanwhile, Dangote Petroleum Refinery, yesterday, insisted that the refinery is fully exposed to international market conditions and must adjust prices accordingly.
The refinery noted that even under Nigeria’s crude-for-naira arrangement, crude oil is purchased at international benchmark prices rather than at discounted rates.

Global logistics costs have also risen sharply. Tanker freight rates have increased from about $800,000 per shipment to roughly $3.5 million, while insurance and financing costs have surged amid heightened geopolitical risk.

The refinery said it continues to operate at its full nameplate capacity of about 650,000 barrels per day, with the potential to expand output to around 700,000 barrels per day.