The Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria, (CORAN), Eche Idoko has said that disruptions at the Strait of Hormuz have driven Brent crude prices higher, though Nigeria stands to benefit from local refineries.
He said this in an interview with ARISE NEWS on Monday, following recent US-Israel strikes on Iran, which have heightened fears of disruptions to oil shipments through the Strait of Hormuz.
Idoko, in his analysis of how Nigeria might be affected said: “Every country that feeds from that channel will be hit, not just by the price hike, but by the shortage in supply. For us in Nigeria, we have a silver lining: our domestic refining capacity, leading the charge with the Dangote Refinery.
“Dangote has assured that Nigeria will be prioritized in the supply of PMS and AGO that drives the economy. This is a silver lining against the backdrop of sharp declines in imports”, he added.
Idoko noted that while pump prices are set to rise, Nigeria will be partly shielded from global price spikes, as higher insurance and logistics costs are already accounted for.
“However, because crude is an internationally priced commodity, the hike in price will definitely affect the pump price because that is their feedstock. We will see price movement, though we won’t be as badly hit as two years ago because we are also dealing with the hike in insurance and logistics costs which are transferred to end-users”, he explained.
Speaking on possible scenarios if the crises continues to escalate, Idoko noted that developing countries like Nigeria face not just revenue losses but also inflationary pressures.
“No one envisaged things would snowball this fast. Analysts predicted crude could go as high as $120 per barrel. For developing countries, it’s not just about revenue; it’s the attendant inflationary effect. We already have budget shortfalls. We might also see scenarios of ‘stranded crude’ if people are unable to off-take cargos. This is the time the government must wake up and put in place protectionist policies for domestic refining and create a synergy between the midstream/downstream and the upstream so local refineries can uptake that crude”, he warned.
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