By ESTHER McWILLIS-IKHIDE

Fuel Shock Returns: How Rising Petrol & Diesel Prices Could Deepen Nigeria’s Cost-of-Living Crisis

Another Fuel Increase

NIGERIANS are facing another potential wave of economic pressure as petrol and diesel prices rise amid stronger crude oil prices, higher freight costs and mounting distribution expenses.

The latest increase came from the Dangote Petroleum Refinery, which raised its Premium Motor Spirit, commonly known as petrol, gantry price by 6.7 per cent.

The refinery increased the price from ₦1,265 to ₦1,350 per litre, effective 12 September 2026.

In a memo to customers, the refinery announced the revised gantry and coastal prices. It also directed customers with existing loading arrangements to return their Automated Truck Certificates for repricing before loading could resume.

For motorists and businesses, the adjustment could have consequences far beyond the refinery gate.

Marketers that buy petrol from the refinery now face higher acquisition costs. They could pass those additional costs to consumers through higher pump prices.

Abuja & the North Face a Bigger Risk

The impact is unlikely to remain uniform across the country.

Lagos, Port Harcourt and Warri have relatively close access to refineries, terminals and other petroleum supply centres. However, Abuja and many northern cities depend heavily on products transported from coastal markets.

That geographical disadvantage adds another layer of cost.

The latest Energy Bulletin by the Industry Competency Centre, Lagos, showed that the seven-day average Brent crude price stood at $98.74 per barrel. Bonny Light averaged $104.65 during the same period.

The bulletin also put the seven-day average exchange rate at ₦1,323.12 to the dollar.

Against that backdrop, the seven-day average domestic petrol price stood at ₦1,308.33 per litre, while diesel averaged ₦1,855.97 per litre.

With coastal ex-depot petrol prices ranging between ₦1,265.50 and ₦1,285 per litre, inland markets face additional transportation and distribution expenses.

Industry estimates suggest that petrol could sell for between ₦1,400 and ₦1,500 per litre in Abuja. Some filling stations could charge more than ₦1,500, depending on supply costs and marketers’ margins.

Northern cities farther from coastal supply centres could face even higher prices.

In Kano, Kaduna, Jos and other inland markets, petrol prices could rise to between ₦1,450 and ₦1,600 per litre, depending on availability, transportation costs and supply routes.

Diesel Adds Another Layer of Pressure

Petrol is not the only concern.

Diesel prices also remain elevated, creating additional pressure for businesses that depend on diesel-powered generators, trucks and other equipment.

The Energy Bulletin placed Lagos diesel ex-depot prices between ₦1,790 and ₦2,100 per litre.

Once transportation and other distribution costs are added, inland prices could reach between ₦2,100 and ₦2,400 per litre or even higher.

That matters because diesel remains an important energy source for many Nigerian businesses.

Manufacturers, construction companies, logistics operators, farms, retailers and other enterprises rely on diesel either directly or indirectly.

Consequently, higher diesel costs can quickly become higher production, transportation and operating costs.

International Oil Market Sets the Tone

The latest increase also illustrates the difficulty facing Nigeria’s deregulated downstream petroleum market.

When crude oil prices rise, domestic refiners and marketers face higher replacement costs. Freight charges can add further pressure.

Olatide Jeremiah, Chief Executive Officer of Petroleumprice.ng, linked the latest increase to developments in the international oil market.

According to him, oil prices and freight rates create challenges for refiners globally, except where governments intervene.

Jeremiah said the impact of the Middle East crisis would ultimately influence gantry and pump prices.

He also projected that petrol prices could approach ₦1,500 per litre in major Nigerian cities if the geopolitical crisis persists.

Businesses & Households Feel the Pressure

Lawal Kamaldeen, Vice President of the Oil and Gas Service Providers Association of Nigeria, said the latest ₦85 increase represents about 6.7 per cent.

He also noted that Dangote Refinery’s cumulative increase since August 21 had reached ₦185 per litre, or about 15.9 per cent.

For Nigerian households already dealing with high living costs, another fuel increase could quickly become a broader economic problem.

Petrol directly affects transportation. It also affects the cost of moving food, agricultural products and other essential goods.

Small businesses face similar pressure.

Many depend on petrol or diesel to operate generators, transport products or provide services. Higher energy costs can therefore reduce profit margins or force businesses to increase prices.

Kamaldeen warned that the impact could spread through transportation, logistics, agriculture, small businesses and other economic activities.

School transportation could also become more expensive, while the cost of moving agricultural produce from farms to markets could increase.

Food Prices Could Become the Next Battleground

The relationship between fuel and food prices remains particularly important.

Farmers need fuel to transport inputs and produce. Traders need fuel to move food between producing areas and urban markets.

When transportation becomes more expensive, sellers often face a difficult choice: absorb the additional cost or pass it to consumers.

That makes higher petrol and diesel prices a potential threat to household purchasing power.

Victoria Ibezim-Ohaeri, Executive Director of Spaces for Change, warned that households could face higher transportation and food costs as fuel prices rise.

She also pointed to the additional burden on households and businesses that depend on petrol- or diesel-powered generators.

According to her, these pressures could further reduce purchasing power, particularly for low- and middle-income households.

She said businesses in manufacturing, agriculture, construction, retail and logistics were similarly exposed to higher energy and transportation costs.

The Inflation Risk

Nigeria’s inflation environment adds another dimension to the problem.

Ibezim-Ohaeri said the country’s headline inflation rate stood at 15.43 per cent, while food inflation stood at 20.31 per cent, according to the National Bureau of Statistics.

A prolonged fuel-price shock could therefore complicate efforts to reduce inflation.

Businesses could respond by raising prices, accepting smaller profit margins, postponing investment or cutting employment.

That could weaken the recovery of the non-oil economy even if higher crude prices increase earnings from the petroleum sector.

Clifford Egbomeade, an economist and communications expert, described the immediate consequence of higher crude prices as a cost shock.

He said higher crude prices would raise the cost of diesel, transportation, freight and other energy-intensive inputs, putting pressure on both businesses and household incomes.

Between Refinery Economics & Consumer Pain

The latest increase highlights a difficult policy dilemma.

Domestic refiners need to operate profitably in a market influenced by international crude prices, freight rates and exchange-rate movements.

At the same time, Nigerian consumers bear the consequences when those costs rise.

Kamaldeen acknowledged that domestic refiners face genuine pressures from international crude prices, product replacement costs and geopolitical disruptions linked to the conflict involving Iran and the United States.

However, he argued that policymakers must also consider the consequences for the domestic economy.

His organisation proposed targeted support for locally refined petroleum products rather than a return to broad, import-based fuel subsidies.

The proposal includes increasing crude allocations to qualified domestic refineries at competitive terms during periods of exceptional international price volatility.

It also calls for possible reviews of taxes, levies and government charges on locally refined products.

Targeted Support Instead of Broad Subsidies

The debate over intervention is unlikely to disappear.

Nigeria abandoned the long-standing petrol subsidy regime because of its enormous fiscal cost and distortions. A return to the old system could therefore create another set of economic problems.

However, the latest fuel-price pressure has revived questions about what government can do when international shocks become severe.

Kamaldeen proposed a transparent and time-bound support framework linked to actual domestic production and supply.

He also called for independent monitoring and clear performance benchmarks.

The objective would be to cushion exceptional price shocks without recreating an open-ended subsidy system.

Building an Economy Less Exposed to Fuel Shocks

Ibezim-Ohaeri argued that Nigeria also needs longer-term solutions.

Rather than treating higher oil prices simply as a revenue opportunity, she urged government to strengthen fiscal and external buffers.

She also called for targeted assistance to households and sectors most exposed to the shock.

Such measures could include temporary cash transfers, transport support and initiatives to reduce the cost of moving food from farms to markets.

Support for agriculture, storage, irrigation and affordable financing could also help prevent energy and transportation costs from translating into even higher food prices.

More importantly, Nigeria needs to reduce its dependence on petroleum-powered economic activity.

Greater domestic gas utilisation, more reliable electricity, renewable energy, efficient transportation systems and better logistics could gradually reduce the wider economy’s exposure to petrol and diesel price swings.

The Road Ahead

For now, the direction of crude oil prices remains critical.

If crude remains around or above $100 per barrel, pressure on refined-product prices could persist. A weaker naira or higher transportation costs could make the situation worse.

Conversely, lower crude prices, a stronger naira and reduced logistics expenses could ease pressure.

That leaves Nigerian consumers watching developments beyond the filling station.

A higher petrol price does not stop with motorists. It can move through buses, trucks, farms, markets, factories, schools and shops.

The central question is therefore no longer simply how much Nigerians will pay for a litre of petrol.

It is how much another fuel shock will add to the cost of living—and how effectively government and industry can prevent that shock from spreading through the wider economy.