An energy economist, Wumi Iledare, says the recent increase in petrol prices to between N1,370 and N1,400 per litre is driven more by domestic economic challenges than movements in global crude oil prices.

Mr Iledare, professor emeritus of petroleum economics and policy research at Louisiana State University, U.S., said this on Wednesday in Lagos.

He identified exchange-rate volatility as the most decisive factor influencing petrol pricing in Nigeria.

“The system remains largely dollarised,” he said, noting that despite the operational presence of the Dangote Refinery, Nigeria has yet to fully exit import dependence.

“As a result, domestic pump prices continue to reflect import-parity benchmarks rather than purely local production dynamics,” he added.

Mr Iledare also pointed to a policy imbalance, saying the rapid removal of fuel subsidies had outpaced the development of a competitive and efficient downstream petroleum market.

This, he said, has left consumers exposed to persistent price volatility driven by foreign-exchange instability, supply chain inefficiencies, and limited refining competition.

He added that the transition has placed pressure on the Nigerian National Petroleum Company, which is evolving from a state-owned entity into a commercially driven national oil company.

According to him, this institutional shift adds another layer of complexity to an already fragile pricing environment.

Mr Iledare warned that the economic impact of rising petrol prices is far-reaching.

“Increases in petrol prices raise transportation and production costs, intensify inflation, erode household purchasing power and constrain industrial output. In a country where petrol underpins mobility, electricity generation and supply chains, such increases quickly ripple across all sectors,” the professor said.

He cautioned against a return to blanket fuel subsidies, describing them as fiscally unsustainable and economically inefficient.

Mr Iledare, however, advocated a targeted approach focused on stabilising the exchange rate, expanding domestic refining capacity, improving market competition and strengthening infrastructure.

He also called for targeted support for vulnerable households rather than broad-based subsidies.

According to him, Nigeria’s fuel pricing challenges reflect deeper macroeconomic and structural issues that require long-term, systemic solutions.

Many filling stations across Lagos, which previously sold petrol at N1,205 to N1,215 per litre, have raised prices. NNPC Ltd stations in Fadeyi, Ikorodu and Palmgrove currently sell at about N1,324 per litre. Major marketers, including MRS, Northwest, BOVAS, AP (Ardova) and Mobil, have also adjusted prices to between N1,334 and N1,350 per litre.

Independent marketers such as Fagbems, Fanfar, Musarok and Ranoil are selling at higher rates, ranging from N1,350 to N1,424 per litre.

(NAN)