New fuel prices are now expected among market watchers after crude oil prices climbed on Monday, August 25, as traders forecast supply disruptions.

This follows expectations that the US Government may decide to impose more sanctions on Russia, coupled with Ukraine’s retaliatory attacks on Russian energy infrastructure.

Oil prices, supply disruptions, and potential sanctions are set to play a big role in how much Nigerians pay for fuel in the days ahead.

Reuters report that Brent crude futures rose 40 cents, or 0.6%, to $68.13 by 1200 GMT, and West Texas Intermediate (WTI) crude futures gained 44 cents, or 0.7%, to $64.10 on Monday.

The market is somewhat concerned that these peace negotiations are going nowhere

"The market is somewhat concerned that these peace negotiations are going nowhere."

"The market is looking for supply to exceed demand in the autumn months, but in the short term that's being challenged by a potential geopolitical disruption."

What high prices mean for Nigeria

Nigeria currently operates a deregulated market, with prices influenced by international crude oil prices and the exchange rate.

Currently, fuel retail price averaged N865 per litre at the Nigerian National Petroleum Company Limited (NNPCL) and Dangote refinery partners' filling stations.

Only a few filling stations are selling above N865 per litre in Lagos, while in Abuja, petrol prices are between N880 and N910.

Similarly, ex-depot prices, which are the rates marketers buy currently, average at N820 and N850 per litre.

There has been a slight increase in the last few hours.

Why is Nigeria affected?

Chinedu Ukadike, the Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, said in an interview that price changes are a result of market deregulation. He explained that in a deregulated market, such as Nigeria’s, prices rise and fall in response to several factors.

These include the price of crude oil as the raw material, the prevailing exchange rate, marketers’ supply costs, and others.

Aliko Dangote made a similar point, noting that his refinery purchases supplies from the United States.

This means that the product is pegged to international crude oil prices and the prevailing exchange rate.

Despite the pain of rising fuel prices, higher crude oil prices mean more revenue for the Nigerian government.