Speaking during a webinar on Tuesday, MEMAN Chairman Hubb Stokman explained that marketers are often forced to increase pump prices quickly when costs surge in order to remain operational and sustain supply.
He noted that rapid price hikes are largely driven by the need to generate working capital for subsequent fuel purchases. According to him, marketers must reflect higher costs immediately to afford the next shipment of petrol, a dynamic common across many fast-moving consumer goods.
Stokman emphasized that the trend is not unique to Nigeria but reflects broader global market behavior. However, he pointed out that petrol pricing appears more noticeable to consumers because of its transparency and direct link to international oil markets.
On the other hand, when global prices begin to decline, the adjustment at the pump is typically slower. He attributed this to existing inventory acquired at higher costs, which marketers must sell before fully passing on reductions.
To manage this transition, he said operators often adopt a gradual pricing approach—sometimes described as creating a “parachute”—to avoid sharp fluctuations that could destabilize the market.
The MEMAN chairman added that ongoing geopolitical tensions, particularly in the Middle East, have intensified volatility in global oil markets. Disruptions linked to key routes such as the Strait of Hormuz have increased freight costs and created supply uncertainties, further influencing domestic fuel prices.
He reiterated that Nigeria’s downstream sector, now largely deregulated, remains closely tied to international price movements, especially under an import parity pricing system where domestic rates reflect global crude benchmarks and foreign exchange conditions.
Also speaking at the session, energy expert Joe Nwakwue highlighted Nigeria’s continued exposure to global oil price swings. He explained that fluctuations in Brent crude are directly transmitted to the domestic market.
While acknowledging efforts such as the naira-for-crude policy, Nwakwue stressed that global shocks will continue to shape local pricing trends under the current structure.
He further underscored the importance of maintaining a competitive market, noting that allowing fuel imports remains essential to preventing price distortions and ensuring fair pricing. According to him, a contestable market environment encourages efficiency and keeps domestic refiners in check.
Industry stakeholders also pointed to structural vulnerabilities across Sub-Saharan Africa, including heavy reliance on imports, limited refining capacity, and weak storage infrastructure. These factors, they said, heighten the region’s exposure to external shocks.
Despite the challenges, Stokman maintained that Nigeria’s supply outlook remains relatively stable, citing more than 30 days of petrol coverage and the role of NNPC Limited as the supplier of last resort.
The discussion comes amid growing public concern over fluctuating fuel prices, with calls for clearer policy direction and measures to cushion the impact on consumers.