In this interview with DAMILOLA AINA, the Chief Executive Officer of petroleumprice.ng, Jeremiah Olatide, discusses how the five-month conflict involving the United States and Iran, along with disruptions to the Strait of Hormuz, affected global crude oil prices, Africa’s fuel supply chain and Nigeria’s petroleum industry
Five months after the US-Iran war began, how would you evaluate its impact on global crude oil prices and the broader petroleum industry?
The last five months have been troubling all over the world. The last time we had a shortage in the distribution of crude across the world was in the 1970s and, for Africa, with the exception of Nigeria, 80 per cent of the continent imports petroleum products. The continent depends more on imports, so the conflict had greater effects on other importing African countries, and it was so negatively impactful that Brent crude hit $120 per barrel; the last time we experienced that was a few years ago. So, it had an effect on our refined products, even as a producing country of both crude oil and refined products; it had quite a negative effect on our prices. Currently, it is getting better. Prices have dropped to an average of $70 for WTI and Brent, but because 20 per cent of the movement of crude passes through the Strait of Hormuz, and Africa depends on quite a lot of products coming from that route, it had quite a few negative effects, with prices of refined products surging by over 100 per cent and a supply glitch in many African countries, such as Kenya and South Africa, which experienced queues at their retail outlets.
It also had negative effects on other essential products; food prices skyrocketed. They went up by an average of 15 per cent in Africa. I must say the effects are quite enormous. Now that the war is winding down, I am hoping that there will be a high level of ease in the petroleum market across Africa, but there is definitely now a bit of ease in the petroleum market in Africa.
How critical is the Strait of Hormuz to global oil trade, and what impact did its closure have on the energy market?
The Strait of Hormuz is a strategic route for the passage of crude and refined products across the world. In short, reports have it that over 130 vessels pass through the Strait of Hormuz on a daily basis, and that number dropped to as low as ten ships at one point. Now that the war has eased, it has moved up to around twenty ships.
It has had quite significant effects on global trade, with prices rising by as much as over 100 per cent in several countries of the world. In short, the South Asian countries depend heavily on the Strait of Hormuz. Africa as a continent also had quite a large effect on its foreign trade, because we import quite a lot of refined products from Europe, and because of the closure, those movements were disrupted, leading to scarcity, leading to a hike in the prices of other essential products in Africa. It had quite a lot of negative effects. So, for me, the five months that the Strait of Hormuz was closed were turbulent months for Africa, because we depended so much on the inflow of crude and refined products from Europe.
But for Nigeria, the case here is quite different. We are lucky to have a functional refinery and, with a crude production of about 1.5 million barrels per day, it has helped us overcome the supply glitch that several countries of the world faced. Prices were supposed to have surged to close to N3,000 per litre if not for the presence of the refinery at a time like this. So, I think that, because of our refining capacity, it has helped us avert the major crisis that other countries faced in terms of the disruption of the Strait of Hormuz.
What key lessons should oil-producing countries like Nigeria draw from the Strait of Hormuz crisis?
For me, two lessons. The first one is more production. The second lesson is prioritisation. Yes, production and prioritisation. We need to produce more.
Crude production of 1.5 million barrels per day on average is quite low, and so we need to make sure that we increase our production capacity, which will in turn impact our refining capacity also. Other refineries should come on stream. Having only one major refiner at a time like this would definitely pose a big risk, because of the tendency for a lack of competition, which we all know could lead to high prices. Also, sometimes when maintenance is carried out, it could bring about supply glitches and so on. So, we need to make sure that the refining space is quite decentralised, bringing many players into the refining space to add value to the numbers in relation to our production.
Secondly, the Petroleum Industry Act is quite clear that local refineries should be prioritised when it comes to crude production. One of the reasons why we faced quite a lot of challenges in terms of production at the refining level was that a good number of the crude that was used at the biggest refinery in Nigeria was imported. So, we were still facing quite a lot of challenges from the US-Iran war, because aside from the fact that there was little or no movement of crude across the world, freight rates rose and it also added to the cost of refining a litre. So, if the case were reversed and the feedstock we use in refining were 70 per cent sourced in Nigeria and 30 per cent imported, I think the Strait of Hormuz crisis would not have had as much effect as we experienced in Nigeria.
So, the lessons here are quite simple. We need to increase our production, both crude and refined products. We also need, having achieved crude production, to prioritise our local refineries and to make sure that 70 per cent of what is being used, the feedstock that is being used, is produced in Nigeria. It will help save Nigeria from international oil price shocks or global crude misfortunes, just as we experienced that of the Strait of Hormuz in Nigeria. I am sure that many Nigerians, many laymen, will be asking: we have a functional refinery, we produce oil, why are prices still high? That is a valid question.
Yes, prices were not supposed to have increased drastically by over 100 per cent if the crude that is being used by those refineries were sourced in Nigeria, and if there were a decentralised refining hub in Nigeria, it could have helped stabilise supply and stabilise prices.
Has the conflict exposed vulnerabilities in the global oil supply chain and the world’s reliance on a handful of strategic shipping routes?
I totally agree, and I think the world has learnt quite a lot of lessons that oil cannot continue to be a major source of our energy mix. You would have noticed how the demand for other renewables increased in the course of the conflict. The sales of electric cars also increased drastically, by over 30 per cent. In Nigeria, there was more demand for solar products. I am sure it is a movement that happened all over the world, and with all that has happened, global economies have learnt that depending on oil and a particular shipping route is quite dangerous.
I have also seen reports of other renewable energy sources being appreciated in the last five months since this crisis started. Electric vehicles, Compressed Natural Gas and the like are now viable alternatives. These solutions will anchor diversified energy sourcing all over the world.
With ceasefire talks underway, do you expect crude oil prices to ease soon, or could the conflict continue to influence the market even after hostilities cease?
We are currently experiencing a calm situation, but with a tendency for a price surge if anything falters. Already, prices have declined sharply to an average of $70 per barrel for WTI and Brent, so it has moderated on average, and the talks are still helping things. Hostility is still on the sidelines, but both parties have experienced the effects of the war, and it has had a negative impact on countries worldwide.
The US has experienced one of the highest spikes in gasoline prices at its retail outlets, close to $4 per litre. That is one of the highest in years. Both countries are aware that this war has caused higher prices across countries of the world, and it is affecting other essential products and could throw the world economy into another recession if caution is not taken.
But for now, there is quite a reasonable decline in price, and it has been reflected in current crude prices. Oil traders are optimistic that these talks will bring prices downward. Several analysts have reported that prices will anchor at an average of $70 per barrel, and we are beginning to experience it. The war is also coming to an end and the world will begin to experience normalcy in pricing.
How realistic is it for oil-producing countries to reduce their dependence on the Strait of Hormuz by developing alternative export routes?
The Strait of Hormuz is once again a critical shipping route, with over 20 million barrels of crude oil passing through it daily. It is more of a strategic route, and it is bringing up discussion on other alternative routes. Actually, there are other routes, such as the Saudi Arabia pipeline, and other routes that traders are working on. So, for me, it is good that the Strait of Hormuz has exposed quite a lot, showing that relying on just certain passages is not the best option and is counterproductive. This has also taught the world a lesson, and I think that this will help in working out other feasible routes that could help in making the flow of oil and products seamless, even when the operations of a major route are affected.
How has the conflict affected Nigeria’s economy and petroleum sector, given that higher crude oil prices often translate into increased fuel costs for consumers?
Well, for me, this is quite a mismatch: as the biggest oil producer in Africa and the owner of the largest refinery, with a capacity of about 700,000 barrels per day, Nigerians still have to pay quite a high amount at the pump. Crude oil prices are not supposed to have an effect on our local prices, because of the abundance of oil that Nigeria has.
For the economy, it has been prosperous through the hike in oil prices, because the 2026 budget benchmark was around $75, and prices rose to above $120. So, the economy has benefited from the global crisis. But Nigerians, on the other hand, have suffered immensely from the government not wanting to intervene, or from a lack of proper intervention. Some of the interventions that they came up with, such as Compressed Natural Gas and all that, have not been successful. Yes, the average Nigerian has not benefited from the CNG initiative. I think a crude-for-naira product arrangement between the federal government and the refinery would have helped to ease pressure on Nigerians.
As Nigeria, as the economy recovers from the crisis, I think there should be an intervention for Nigerians. Yes, because 80 per cent of Nigerians still live in abject poverty, and for them to pay as much as N1,300 per litre at the pump is quite outrageous and, for a developing country, quite unbelievable. Yes, there should be a form of intervention. The government could have helped with price control, or helped the government of the day to cap prices, when this crisis is finally over. But Nigeria as a country has benefited. Unfortunately, Nigerians have not benefited, nor did they benefit from the abundance of high prices in Nigeria, which for me is quite unfortunate. It is not too late; the Nigerian government can still intervene. An average of N1,200 per litre is quite outrageous, and for me it is wrong.
Yes, there should be an intervention. Countries of the world have intervened in a period like this, and for us to have additional revenue due to the hike, or the rise, in crude oil prices, being that our budget benchmark was lower, I think part of it is supposed to be ploughed back into making sure that the price at the pump is reduced.
Despite increased domestic refining capacity, particularly from the Dangote Refinery, Nigerians are still vulnerable to global oil market shocks. What does this tell us about the country’s energy security?
Despite increased domestic refining capacity, particularly from the Dangote Refinery, Nigerians are still vulnerable to global shocks. What does this tell us about the country? It just means that there is no connectivity between the upstream and the downstream. Yes, the upstream is doing quite well with 1.5 million barrels per day, and the Dangote Refinery, which is the biggest refinery, is doing 700,000 barrels per day, which is just half of what we refine. So, I feel that production needs to be stepped up, because on average, Nigeria’s potential in relation to production is about 2.5 million barrels per day. So, there is over one million barrels per day of potential capacity that can be produced.
So that is why, at the time the war started, the Dangote Refinery still sourced 60 per cent of its crude from foreign sellers and countries of the world. With that, you would not expect Nigerians to really enjoy the dividends of the abundance of oil we have.
But at the same time, I also think that a decentralised market supply could have helped to bring down prices. Having a single major player is not too good for an economy like Nigeria. A decentralised market would have helped, though Dangote, as an organisation, has done quite well. They have stabilised supply, because one of the two major issues that Nigerians were faced with before the refinery came on stream was supply glitch and price. So, as for the supply glitch, it has been solved.
I know that as soon as other players come on stream—the NNPC refinery that is currently being renovated or revamped in partnership with the Chinese companies, if it comes on stream, it will help decentralise the supply chain, and also the BUA refinery of 200,000 barrels capacity that is coming on stream. As soon as that is up, Nigerians would see a bit of competition and prices would drop at the gantry and also at the pump. So, this also indicates that the country needs to increase, or improve more on, production.
Secondly, there needs to be connectivity between upstream and downstream. Upstream should be able to supply 70 per cent of what the downstream needs. Yes, that is that connectivity. Without that connectivity, we will still be running on the spot in the downstream sector in Nigeria.
To what extent have higher crude oil prices and disruptions to global supply chains influenced the prices of petrol, diesel and aviation fuel in Nigeria?
It has really affected a whole lot, largely on aviation fuel. It has even helped Nigeria to be ranked among the top exporters of aviation fuel. For me, it has really affected the cost of petrol, diesel and other products by over 100 per cent. So, it has affected pump prices and gantry prices in all senses.
What measures should the Federal Government, regulators and industry players adopt to shield Nigerians from the impact of future geopolitical disruptions on fuel prices and energy security?
It is unfortunate that Nigeria suffered the most from this crisis, in terms of high prices at the pump, and I would say that the operators took advantage of the rising prices of refined products and they were able to pass on the cost to the end users.
For me, I think there is a regulatory glitch in the downstream sector. Abnormal profit should be frowned upon. Hoarding of products should also be frowned upon. The Federal Competition and Consumer Protection Commission needs to step up to make sure that Nigerians are not taken undue advantage of. We saw how prices rose. In just one month, prices went up over ten times, citing crude oil prices. But now that prices are dropping, we cannot see how, and it is taking a lot of time for prices to decline. This calls for proper regulation. Otherwise, the average Nigerian will be the one to pay through their nose.
The FCCPC and the Nigerian Midstream and Downstream Petroleum Regulatory Authority have a whole lot of protection to do for Nigerians, to make sure that operators are properly checked and undue advantage is not taken of Nigerians in terms of pricing, from wholesale traders down to retail traders. This needs to be checked.
Looking ahead, what are the major opportunities and risks the US-Iran conflict and continued uncertainty in global energy markets present for Nigeria’s oil and gas industry?
There is a great opportunity for Nigeria to become a net exporter of refined products in Africa, because the conflict has exposed the weaknesses, or the upside, of the African market depending on the importation of petrol and crude oil. Africa has depended heavily on importing refined products and this has created a vacuum. It has engineered Dangote to increase refining capacity from 650,000 barrels per day to 2,100,000 barrels per day across Africa: 1.4 million barrels in Nigeria and 650,000 in Kenya. That would be giving Africa close to 300 million litres of production on a daily basis, and it has also exposed this opportunity to other investors that the refining space is quite a big space that they should go into.
Going forward, the refining hub in Africa is going to open up, and in another five to ten years’ time, we would see a good number of refineries springing up. In ten years, Africa is going to move from being an importing continent to direct production and an abundance of refined products on the continent. This would definitely help, as it creates opportunities, and what I would indicate is that the major opportunity for oil and gas is that we are opening up the refining space, and in ten years, Africa would be producing what it consumes in terms of refined products.
It is going to help improve the economy in Africa, our currency, and our image and standing in the world. So, I can say the US-Iran conflict is a blessing in disguise for Africa and Africans.
What core values underpin petroleumprice.ng, and what key challenge was the platform created to address?
Three values drive everything we do. The first is accessibility. On petroleumprice.ng, traders can get prices, real-time news, and connect with buyers or sellers with a single click. The second is transparency. We are opening up an industry that was historically opaque and making information that was once hidden publicly available in real time. The third is advocacy. We are pushing for policies that positively affect trading in the downstream sector and will continue to collaborate with industry organisations to drive that advocacy in Nigeria over the coming years.
Besides fuel prices, which other aspects of the downstream petroleum sector does petroleumprice.ng monitor?
We have three pillars: price, marketplace and news. We currently track depot prices across Nigeria, and by next year we will launch retail outlets. We are also building Nigeria’s first digital petroleum marketplace, where sellers can list equipment and products, and buyers can connect and transact in real time. Our news operation has also positioned petroleumprice.ng as the authority for downstream petroleum news in Nigeria, and to have built credibility across all three pillars in under two years is something we are genuinely proud of.
Despite the gap between depot prices and pump prices, who should be held accountable for the disparity?
This is precisely why petroleumprice.ng is fast becoming an authority in the sector. We exist to close that gap through transparency. When traders at both ends of the supply chain can access real-time prices, it disciplines the market. To be specific: the cost of loading and transport within Lagos should not exceed N20 per litre. When you factor in a reasonable retailer margin, the difference between depot price and pump price should not exceed N40 in Lagos and N50 outside Lagos. If the NMDPRA and platforms like ours work in tandem, those margins can be enforced and Nigerians will be better protected at the pump.
