US-Iran crisis: 94 countries subsidise fuel as Nigerians pay more

As the US-Iran conflict escalates and the Strait of Hormuz remains closed, 94 nations have implemented price-support measures to mitigate the impact of the energy crisis, according to the International Energy Agency (IEA). Of these, 58 countries have adopted energy conservation measures, while 30 have unveiled longer-term structural policies to reduce fuel usage.

The disruption of oil and gas shipping through the strategic passage has sent shockwaves through global energy markets, leading to higher petrol prices in several countries, including Nigeria, where pump prices have risen above N1,300 per litre in some regions. The IEA’s Jérôme Bilodeau noted that demand-side measures can moderate but not fully replace the energy typically transported through the Hormuz strait.

Bilodeau highlighted that 58 governments have introduced energy conservation measures, targeting oil consumption through reduced private transportation, working from home, and government travel adjustments. Meanwhile, 94 governments have provided price supports, including fuel subsidies, caps, and tax measures. Notably, Japan and South Korea have introduced price caps and fuel subsidies, while Vietnam has lowered taxes on electric vehicles, and India is promoting electric stoves.

The IEA official further mentioned that 30 governments have outlined structural policies to lower fuel consumption over time, such as energy efficiency programs, electrification plans, and renewable energy incentives. In Nigeria, energy experts and industry associations have urged targeted interventions to alleviate the burden on households and businesses.

Prof Adeola Adenikinju, a former President of the Nigerian Association of Energy Economics, suggested that part of the additional revenue from higher crude prices should support vulnerable Nigerians. The Petroleum Products Retail Outlets Owners Association of Nigeria called for measures to reduce transportation costs and prevent fuel price hikes from exacerbating food inflation.

The Independent Petroleum Marketers Association of Nigeria advocated for a reduction in taxes and charges on petroleum products to help moderate pump prices. However, the Federal Government has resisted these calls, maintaining its commitment to a market-driven approach and rejecting the removal of fuel subsidies as irreversible.