Diesel prices in Nigeria are unlikely to fall after Russia announced a lifting of the export embargo on Friday, October 6.
According to The Times, an oil and gas analyst, Etulan Adu, stated that despite Russia’s lifting of its export embargo, which is meant to relieve pressure on the world market, other factors would still cause diesel prices to remain high in Nigeria.
The Russian Government’s declaration represents a significant easing of the severe limitations that were initially put in place on September 21, 2023. Diesel prices experienced a dramatic increase as a result of the earlier ban’s enforcement.
Given that Russia is a substantial exporter of crude oil and a major supplier of diesel to the world market, any changes to its export regulations might have an immediate impact on supply chains and pricing dynamics in global markets.
According to oil and gas analyst Adu, lifting this embargo is probably a response to the need to stabilize diesel prices and allay worries about supply interruptions, both domestically and internationally.
Adu added, “Restocking the depots and reducing the rate of price growth would be made possible by lifting the restriction in Russia. Due to Nigeria’s currency volatility, fuel costs won’t be on the down but rather will stay high.
“The majority of the fuel used in Nigeria comes from imports, while the refineries are being renovated. The country has deregulated diesel. Nigeria is one of Russia’s largest exporters of petrol and diesel, so it stands to reason that market limitations would have an impact on the country’s depot pricing and stock levels.
“However, given that the price of Brent crude oil fell last week and is currently $87 per barrel as of Monday morning, the price of diesel would fall. Manufacturers might be impacted by the current stock levels, which might also increase the cost of logistics and trucking, raising inflationary concerns.”
Additionally, Adu stated that as winter approaches, the United States’ diesel stockpile is low despite an increase in demand, which he said might put pressure on the global markets.
According to Adu, refinery outages, altered global oil trade flows, a cautiously optimistic freight market in the United States, and inventories at some of their lowest levels in years have tightened the diesel market and are likely to tighten it further in the coming months, particularly if a cold winter hits the Northeast, where diesel and other distillate supplies are extremely tight.
The Dangote Refinery in Lagos, Nigeria, had promised to begin refining diesel and jet fuel this month October. This might make it easier to buy diesel locally in the country.
On September 21, Russia took a key step by temporarily banning the export of diesel to all countries, with the exception of Belarus, Kazakhstan, Armenia, and Kyrgyzstan.
The main goal was to address issues with diesel availability and pricing in order to stabilize the domestic market.
However, only four days later, on September 25, Russia relaxed some of these harsh prohibitions. The updated guideline now allowed the export of diesel with greater sulphur content and bunker fuel designated for particular vessels.
This change in strategy occurred against the backdrop of a global diesel scarcity, which had already increased diesel prices.
Russia’s initial action to impose export restrictions on diesel underlined its priority of protecting its home market and maintaining stable fuel prices.
However, Russia showed a willingness to balance its domestic priorities with broader considerations of ensuring a smooth supply chain for essential commodities like diesel, particularly for vessels and industries reliant on higher sulphur level diesel, as a result of its recognition of the larger global context and the potential strain on the international market due to the diesel shortage.
