Oil marketers in Nigeria are sounding the alarm about a sharp drop in fuel demand. This change follows a continuous rise in petrol prices. Operators say that higher pump prices are hurting their business and forcing customers to buy less.
Petrol Price Surge and Falling Demand
According to Nairametrics, prices in the downstream petroleum market have jumped from around ₦839 per litre to over ₦1,230 per litre in recent weeks. This increase is largely due to rising global crude oil prices amid geopolitical tensions.
Industry experts report that as prices have gone up, customers who used to buy 10,000 to 20,000 litres at a time are now purchasing as little as 1,000 to 2,000 litres. This shift reflects a dramatic drop in demand at retail outlets.
Marketers Say Costs Are Rising Faster Than Revenues
In a conversation with Nairametrics, Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), mentioned that the cost of stocking fuel has increased significantly, squeezing profit margins.
“This is a product we were getting with around N50 million, now we are getting it with more than N60 million or N70 million per truck, and the bank will bill us. All those loans we collect from banks—the interest rate is high,” said Ukadike.
He added that even though the financial turnover is higher, profits are low, creating instability for independent fuel sellers.
Another voice in the industry, Anwalu Ahmed, noted that petrol prices are affected by replacement costs. This means that marketers must set retail prices based on the cost of the next shipment, rather than on previous prices they paid.
Why Prices Are Rising
According to the report, rising crude oil prices, which have exceeded $104 per barrel due to increasing tensions involving the United States, Iran, and Israel, are a major factor driving up petrol prices.
Reports highlight how conflict in the Middle East has disrupted oil supply routes, causing instability in energy markets. This disruption pushes up crude costs and adds pressure along gasoline supply chains.
Operational Challenges for Marketers
Marketers also point to retailers having trouble with logistics and infrastructure, in addition to the rise in gas prices. Transporting high-value fuel stocks often takes several days because of bad road conditions, traffic jams, and a lack of secure storage facilities along major supply routes.
This long transit raises security risks, as the threat of theft or accidents hangs over every trip. These things, along with rising acquisition costs, put a lot of pressure on cash flow and make it harder for retailers to keep a steady supply of goods to customers.
Broader Economic Impacts
Industry groups, including the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), are urging the government to implement measures that will ease the impact of rising petrol prices on consumers and transport costs.
Economic analysts have warned that high energy costs might threaten small and medium-sized enterprises (SMEs) across the economy, squeezing margins for businesses that depend on transport and logistics.
Labour unions, including the Nigeria Labour Congress (NLC), are calling for federal intervention, stating that rising petrol prices are driving up living costs and increasing prices for transportation and food.
What This Means for Consumers
As marketers raise prices to avoid losses, many consumers are cutting back on fuel usage, changing their travel patterns, and looking for alternatives when possible. The decline in demand highlights how sensitive domestic consumption is to price changes in essential fuels like Premium Motor Spirit (PMS).
