The upturn in global crude oil prices has pushed the landing cost of Premium Motor Spirit (PMS) popularly called petrol imported into Nigeria to over N282 per litre.
The further rise in the landing cost of petrol means increased subsidy as the pump price of the product remains steady at N162-N165 per litre.
This is as the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced on Tuesday that the Federal Government was staying action on the plan to remove subsidy which will jerk up fuel price to over 300 naira per litre.
The landing cost of the product rose to N282.29 per litre on January 20 as the international oil benchmark, Brent crude, jumped to $89.75 per barrel that day from $77.24 per barrel on December 31, 2021.
Brent rose further on Wednesday to $90.22 per barrel as of 5.19 pm Nigerian time, its highest level since 2014.
This sharp rise in global oil prices to record highs will further push the subsidy cost being incurred by the Federal Government.
Brent oil later on Wednesday surpassed $90 per barrel to strike the highest level for more than seven years, rattled by geopolitical tensions in Ukraine and supply concerns in the Middle East.
European benchmark Brent North Sea crude rallied as high as $90.42 in afternoon London trade, attaining a level last seen in October 2014.
The contract later stood at $90.23, up 2.3 percent from Tuesday.
“This has been coming for a while and even over the last week when prices were easing a little, there was little hope that it would lead to any kind of significant pullback,” OANDA analyst Craig Erlam told AFP.
“With the price now above $90 and gathering momentum once more, it may just be a matter of time until it’s flirting with $100.
“The fundamentals (of supply and demand) remain bullish for oil prices and the prospect of a Russian invasion of Ukraine will only increase the risk premium,” he added.