Mr. Mike Osatuyi, former Operations Controller of the Independent Petroleum Marketers Association of Nigeria (IPMAN), has warned that petroleum product prices may stay high until stability is restored in the Middle East.
He made the remarks in an interview with journalists on Tuesday in Lagos.
Osatuyi explained that ongoing geopolitical tensions in the Middle East, a region with substantial global crude reserves, have disrupted supply and driven up international oil prices.
He added that the conflict is inevitably pushing up the cost of refined petroleum products worldwide.
“The global increase in crude oil prices is largely a result of the crisis in the Middle-East.
“The region accounts for more than 47 per cent of the world’s oil reserves and over 25 per cent of daily crude production.
“Any disruption in such a critical supply hub automatically tightens global supply and pushes prices upward,” he said.
Osatuyi explained that rising crude oil prices directly influence the cost of petrol, diesel and aviation fuel worldwide.
According to him, the situation follows the fundamental economic principle of demand and supply.
“With a significant portion of supply threatened, prices naturally move upward.
“This is largely beyond the control of governments or petroleum marketers,” he said.
Osatuyi added that the price surge was already reflected in global benchmarks.
He said Brent crude traded at about $116 per barrel, while West Texas Intermediate stood around $111 per barrel.
He described the emergence of the Dangote Refinery as a major turning point for Nigeria’s energy security after decades of reliance on imported petroleum products.
“For years, Nigeria depended almost entirely on imports because the four refineries owned by Nigerian National Petroleum Company Ltd failed to produce refined products for decades,” he said.
He described the prolonged non-performance of the Port Harcourt, Warri and Kaduna refineries as one of the most glaring failures in Nigeria’s energy sector.
He recalled that successive governments spent huge sums on maintenance and rehabilitation without meaningful results.
“Between 2010 and 2023, more than N11 trillion was spent on rehabilitation, salaries and maintenance of the four refineries.
“Turnaround maintenance alone cost between $18 billion and $25 billion, yet the facilities remained largely non-functional,” he said.
Osatuyi criticised opposition to the proposed privatisation of the refineries in 2007, describing it as unpatriotic given the heavy financial burden on government.
He noted that although the government now supplies crude oil to the Dangote refinery in naira, global crude prices still determine refined product costs.
“As long as international crude prices remain high, pump prices will reflect that reality.
“The pricing structure ultimately follows global benchmarks and exchange rates set by the Central Bank of Nigeria,” he said.
He warned marketers against holding excessive stock during the volatile period.
According to him, oil prices could fall sharply if the geopolitical crisis suddenly eases.
“The disruption in Middle-East production could end abruptly, causing crude prices to drop sharply.
“Operators holding heavy stock may face significant losses,” he cautioned.
In spite of high prices, Osatuyi said Nigeria was unlikely to face product shortages due to the refining capacity of the Dangote facility.
He said the refinery had massive storage capacity estimated at about 4.6 billion litres of refined products.
He said expansion plans could increase storage capacity to about 5.3 billion litres.
“With this production and storage capacity, Nigeria is technically secure in product availability.
“However, prices will continue to reflect high crude costs in the international market,” he said.
Osatuyi added that the duration of the Middle-East crisis would determine how long global petroleum product prices remain volatile.
He said prices would adjust once stability returns to the region and crude supply normalises.