Global Tensions Rise: Nearly 100 Nations Offer Petrol Subsidies, While Nigerians Face Increased Fuel Costs

The global community has been grappling with the aftermath of the US-Iran war and the closure of the Strait of Hormuz, with over 115 countries implementing measures to mitigate the energy shock, according to the International Energy Agency.

n

These measures include energy conservation, price support, and structural policies aimed at reducing fuel consumption, with 94 governments introducing price-support measures, 58 adopting energy conservation measures, and 30 announcing longer-term structural policies to reduce fuel use.

n

The disruption of energy flows through the Strait of Hormuz has sent shock waves through global energy markets, with Nigeria feeling the impact through higher petrol prices, which rose above N1,300/litre in some parts of the country before subsiding to N1,200/litre.

n

The increase in energy costs has also pushed up transportation, food, and business operating costs in Nigeria, prompting energy economists and industry stakeholders to call for targeted interventions to ease the pressure on households and businesses.

n

Jérôme Bilodeau, the IEA’s head of analysis for its Office of Energy Efficiency and Inclusive Transitions, notes that demand-side measures cannot replace the enormous volume of energy normally transported through the Strait of Hormuz but can moderate the impact of the disruption.

n

Bilodeau stated that 58 governments have introduced energy conservation measures since the war began, mainly targeting oil consumption through reduced private transportation fuel use, working or studying from home, reduced government travel, and adjustments to cooling temperature settings.

n

He also mentioned that 94 governments have introduced price supports, such as fuel subsidies, price caps, and tax measures, with Japan and South Korea introducing price caps and fuel subsidies, and Vietnam lowering taxes on electric vehicles.

n

Additionally, Bilodeau noted that 30 governments have announced structural policies to reduce fuel consumption over the longer term, including energy efficiency programs, electrification plans, and renewable energy incentives.

n

In Nigeria, energy economists and industry groups are calling for targeted measures to cushion consumers from the impact of the energy shock, with former Nigerian Association of Energy Economics President Prof Adeola Adenikinju urging the Federal Government to use part of the additional revenue generated from higher crude prices to support vulnerable Nigerians.

n

Adenikinju emphasized that rising petrol prices have increased transportation costs and worsened inflation, stressing that support should extend beyond civil servants to Nigerians in the informal and private sectors.

n

The Petroleum Products Retail Outlets Owners Association of Nigeria is also urging the government to deploy measures to reduce transportation costs and prevent higher fuel prices from worsening food inflation, with National President Billy Gillis-Harry calling for the government to return some of the gains from higher crude prices to Nigerians.

n

The Independent Petroleum Marketers Association of Nigeria is calling for a reduction in taxes and charges imposed on petroleum products, arguing that this would help moderate pump prices, with spokesman Chinedu Ukadike stating that charges imposed by agencies should be reviewed.

n

Ukadike suggested that the government should cut down on taxes, especially the NIMASA taxes, to help bring down the price of petroleum products, and also called for the rehabilitation of petroleum pipelines to reduce transportation costs and the acceleration of CNG vehicle conversion.

n

The Lagos Chamber of Commerce and Industry is urging the government to take advantage of the crisis to strengthen domestic refining and accelerate the shift towards alternative fuels, with the Director of the Centre for the Promotion of Private Enterprise, Muda Yusuf, calling for fiscal incentives for domestic refiners and greater investment in mass transportation.

n

However, the Federal Government has rejected the calls, with Minister of Finance and Coordinating Minister of the Economy Taiwo Oyedele stating that the government would maintain its market-driven approach and describing the removal of subsidy as irreversible.

n

Oyedele noted that the government would not bring back the fuel subsidy because it creates distortions for the economy and would not introduce price control because it believes in the market.

n

Petrol prices in Nigeria have risen significantly since the removal of the subsidy by President Bola Tinubu in May 2023, from about N200 per litre to over N500 per litre, and subsequently to about N1,200 per litre in 2024 before interventions by the Dangote Petroleum Refinery helped bring prices down to an average of about N800/litre.

n

Despite the pressure from stakeholders, the Federal Government maintains that returning to subsidy or imposing price controls would undermine the reforms it has introduced in the petroleum sector, with Oyedele emphasizing that market-based pricing is necessary to attract investment and maintain macroeconomic stability.

n

Oyedele stated that the government would continue to regulate the downstream market to protect consumers, ensuring that fuel suppliers and marketers do not extort Nigerian consumers, and also argued that the geopolitical crisis could present an opportunity for Nigeria rather than simply exposing the country to higher energy costs.

n

The global response to the energy crisis has gone beyond immediate fuel-price interventions, with the IEA reporting that heat pump sales in the first quarter of 2026 rose by 22 per cent in France, 34 per cent in Germany, and 20 per cent in Poland compared to the corresponding period in 2025.

n

Electric car sales also increased by 65 per cent in India, 150 per cent in South Korea, and 80 per cent in Southeast Asia during the same period, according to the IEA, which also noted that Japan has introduced subsidies for electricity and natural gas, while India has capped industrial gas usage.

n

The policy responses have coincided with weaker global liquids demand, with S&P Global Energy CERA’s August Short-Term Outlook showing that global liquids demand fell to 99.2 million barrels per day in May 2026 from 105.1 million bpd in May 2025.