Middle East conflict: CPPE and other groups caution of potential spike in gasoline costs and rising inflation rates

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…As oil hits $146/barrel
By Udeme Akpan & Ediri Ejor

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There were growing concerns yesterday that the price of Premium Motor Spirit, PMS, also known as petrol, may rise further as crude oil climbed to $146.4 per barrel from $120, representing a 21 per cent increase, driven largely by the ongoing United States–Iran conflict.

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Crude oil remains a critical feedstock for refining, with significant implications for operating costs across the midstream and downstream segments of the petroleum industry.

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Market data showed that while Brent crude rose to $112.2 per barrel from $110, and Nigeria’s Bonny Light increased to $114 from $112.20, the Murban crude benchmark surged by 12 per cent to $146.4 from $120 in the global oil market.

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In his immediate reaction to the development yesterday, President of the Petroleum Products Retail Outlets Owners Association of Nigeria, PETROAN, Dr Billy Gillis-Harry, said: “As long as the war persists, crude oil prices will continue to fluctuate, leading to instability in petroleum product prices across countries, including Nigeria.

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‘’ However, Nigerians should not panic, as panic-buying will worsen the already difficult situation.”
Also speaking, a Professor of Petroleum Economics, Wumi Iledare, noted: “The Iran tension has pushed global crude prices up by roughly 7–10 per cent or more. In import-dependent markets like West Africa, such shocks typically translate into a 5–8 per cent increase in petrol prices, as refined products quickly track crude movements.

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“However, with the Dangote Refinery processing domestic crude, part of the global price escalation can be absorbed through logistics savings, freight elimination, and supply smoothing — potentially dampening about 20 per cent of the price shock.”

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Similarly, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, CPPE, Dr Muda Yusuf, warned that rising energy costs could worsen inflationary pressures in the country.

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He said: “Food, transport, and energy costs continue to rise at a pace that erodes purchasing power. Real incomes remain under severe strain, particularly for vulnerable and urban households. ‘’Disinflation, in this context, simply means a slower rate of price increases—not a reduction in the cost of living.

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“Energy, logistics, and raw material costs remain elevated, while weak consumer demand limits pricing flexibility. This is squeezing margins, reducing profitability, and increasing business vulnerability, particularly in consumer-facing sectors.”

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He identified escalating geopolitical tensions in the Middle East, particularly involving Iran, Israel, and the United States, as the most immediate threat to Nigeria’s inflation outlook.

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“The conflict has already triggered a surge in crude oil prices above $100 per barrel, amid disruptions to energy infrastructure and increased risks to global supply routes, including the Strait of Hormuz.

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“For Nigeria, the transmission channels are direct and profound—higher petrol and diesel prices, increased transportation and logistics costs, rising production costs, exchange rate pressures, and escalating food prices.

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“Heavy reliance on petrol and diesel for power generation, due to unreliable electricity supply, creates a strong and immediate pass-through from global oil prices to domestic inflation.

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“Estimates indicate that unreliable electricity imposes annual economic losses of between N7 trillion and N10 trillion, while spending on generators exceeds n3.7 trillion annually,’’ Yusuf added.

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He urged fiscal and monetary authorities to remain cautious, adding that “the resurgence of inflationary pressures and external shocks make premature policy easing risky.

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‘’Oil revenue windfalls should be managed prudently, with a focus on strengthening foreign exchange reserves and supporting productive sectors.

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“A proactive, coordinated and forward-looking policy response is imperative to safeguard macroeconomic stability and protect citizens from worsening economic hardship.”

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