Crude hits $126, petrol price hike looms

Nigeria's Bonny Light crude oil price has reached $126.32 per barrel, leading to speculation of an upcoming petrol price hike in the domestic market. This figure, provided by the Central Bank of Nigeria on September 15, marks a significant increase from $123.28 on September 14. The rise comes as Bonny Light now trades at a 17% premium over Brent crude, which has also surged to $108.49 per barrel.

Brent usually serves as the benchmark for Nigeria's crude grades, but the current premium highlights the heightened demand for Nigeria's light, sweet crude compared to the international benchmark. The price of Bonny Light has climbed steadily since August 27, when it was $91.23 per barrel, indicating a 38.5% increase over the past two months.

This surge is attributed to concerns over global oil supply disruptions, particularly in the Middle East. The price hike poses challenges for Nigeria's downstream oil sector, where petrol prices have already risen. Dangote Petroleum Refinery recently increased its Premium Motor Spirit price from N1,265 to N1,350 per litre, adding to recent price increases in the market since late August.

While higher crude prices could benefit Nigeria's oil earnings and government revenue, they also pose a challenge to the domestic market as they increase production costs for refiners and domestic consumers.