In a dynamic twist of economic factors, the oil market stands poised for potential turbulence as oil marketers eye a potential hike in the price of Premium Motor Spirit (PMS), commonly known as petrol. This comes as the naira continues its weakening trajectory against the US dollar. Here are the key highlights from this unfolding scenario:
Dollar’s Surge Ignites Price Speculation
The value of the naira in comparison to the US dollar plunged further, reaching 920 naira/dollar on the black market, a concerning drop from 900 naira/dollar just a day before. This devaluation has reignited speculations regarding the sustainability of the current pump price of petrol.
Marketers Predicted Price Adjustment
Oil dealers and marketers assert that the current exchange rate of 920 naira/dollar renders the existing petrol price of 617 naira per liter untenable. They forecast a possible rise in petrol prices, projecting a range between 680 and 700 naira per liter. This projection is based on the fact that the forex rate had been around 750 to 800 naira/dollar when the cost of petrol was previously pegged at 590 to 617 naira per liter.
Potential Government Subsidy
Despite the insistence by the Federal Government that it would not raise petrol prices, oil marketers speculate that a covert subsidy might be in play due to the prevailing exchange rate. As per their projections, this could result in an estimated subsidy of about 90 naira per liter. Should these speculations hold true, it could imply a substantial financial burden on the government’s budget.
The brewing situation reflects the intricate interplay between currency devaluation and fuel pricing, with economic dynamics suggesting a potential shift in the pump price of petrol. Marketers’ projections collide with official statements, creating an air of uncertainty within the energy sector and compelling both consumers and stakeholders to monitor the situation closely.
