Soaring energy costs lead to decline in sales of gasoline, diesel, and liquefied petroleum gas

Nigerian consumers reduced their consumption of petrol, diesel, and cooking gas during the first half of 2026 due to rising pump prices, which led to increased energy costs and squeezed household incomes.

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The H1 2026 Downstream Industry Analysis Report by the Major Energy Marketers Association of Nigeria revealed a direct correlation between higher fuel prices and decreased demand for the country's three major petroleum products.

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The average retail price of Premium Motor Spirit, or petrol, increased from N1,035 per litre in January to N1,051 in February, and then climbed to N1,289 in March, with further increases to N1,533 in April and a peak of N1,596 in May, before easing to N1,300 in June.

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As prices rose, average daily petrol consumption fell from 60-61 million litres in January to 58 million litres in February, dropping sharply to 48 million litres in March, and then recovering slightly to 51 million litres in April, before declining to 46-47 million litres in May and marginally improving to 48 million litres in June.

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Diesel consumption also declined as prices rose, with Automotive Gas Oil selling for an average of N1,362 per litre in January, N1,420 in February, and N1,648 in March, before surging to N2,475 in April and reaching N3,277 in May, and then moderating to N2,900 in June.

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Average diesel consumption stood at 19.5 million litres per day in January, rising slightly to 20 million litres in February, before declining to 15.5-16 million litres in March, recovering modestly to 17.5 million litres in April, and then settling at 16 million litres daily in May and June.

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Liquefied Petroleum Gas demand also weakened, with average prices increasing from N1,086 per kilogramme in January to N1,360 in February, N1,572 in March, N1,791 in April, and N1,800 in May, before easing to N1,661 in June.

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Consequently, LPG consumption fell from 4.9-5.0 kilotonnes daily in January to 4.3-4.4 kilotonnes in February, briefly recovering to 5.1-5.2 kilotonnes in March, before declining steadily to 4.2 kilotonnes in June.

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The Major Energy Marketers Association of Nigeria attributed the higher fuel prices to rising global crude oil prices, driven by geopolitical tensions in the Middle East and disruptions to shipping through the Strait of Hormuz, although crude prices eased in June.

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The association noted that Nigerian consumers had become increasingly price-sensitive, with higher pump prices resulting in lower consumption of petrol, diesel, and cooking gas.

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The MEMAN cautioned against relying solely on domestic refining for Nigeria's fuel supply, warning that complementary imports would remain critical to guaranteeing energy security, promoting competition, and preventing excessive market concentration.

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According to the report, the Nigerian downstream petroleum sector has entered the second half of 2026 at a critical juncture, with the focus shifting from increasing refining output to building a competitive and resilient downstream market.

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The association emphasized that imports should continue to complement local refining despite improved domestic capacity, to ensure supply diversity and sustain competitive market conditions.

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MEMAN also warned that Nigeria's long-term fuel supply should not depend on a single refinery, and called for the establishment of a National Strategic Stock to cushion refinery outages, logistics disruptions, and geopolitical shocks.

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The association stated that the second half of 2026 would be a period of market consolidation, with priorities centred on stronger regulation, balanced supply arrangements, and enhanced energy security.