The Major Energy Marketers Association of Nigeria (MEMAN) has clarified the market mechanics behind the frequent observation that domestic petrol prices rise rapidly in response to global shifts but decline more slowly, attributing the pattern to standard cost recovery and inventory management practices in a volatile, deregulated market.
According to MEMAN Chairman Hubb Stokman, marketers must quickly adjust pump prices upward when global costs surge to generate the working capital required to replenish fuel supplies. This swift reaction prevents stockouts and business disruption. The phenomenon, he noted, is common in fast-moving consumer goods but is particularly visible for fuel due to its transparent, internationally-linked pricing.
The downward adjustment is typically more gradual. Stokman explained that marketers often hold inventory purchased at previous, higher costs. Reducing prices too quickly before this stock is sold would erode margins. A measured decline, he said, creates a financial buffer or “parachute,” stabilising the market against sharp reversals that could harm operations.
This dynamic is acutely felt in Nigeria, where pump prices largely follow import parity—reflecting global crude oil benchmarks and foreign exchange rates. The ongoing Middle East crisis has intensified global oil price volatility, supply concerns, and freight costs, directly transmitting shocks to the Nigerian market. Energy expert Joe Nwakwue of Zeta Advisory affirmed that any significant movement in Brent crude prices impacts local costs immediately.
However, the current volatility also presents a strategic opportunity for West Africa. Stokman suggested that Nigeria’s quality crude, growing refining capacity, and large consumer base could position it as a more reliable regional energy hub amid global supply chain uncertainties.
Nwakwue stressed that a competitive, contestable market—where allowed imports continually pressure domestic refiners to price fairly—is essential to mitigate price distortions. He warned that reliance on a singlesupply source, even a local refinery, risks creating monopolistic pricing.
Despite the challenges, Stokman pointed to mitigating factors, including over 30 days of national petrol supply coverage and the role of NNPC Limited as a supplier of last resort, which contribute to market stability.
The explanations arrive amid public concern over fuel price fluctuations. Analysts contend that while market forces drive the pricing mechanism, clear government policy and sustained investment in storage and logistics are crucial to cushion consumer impact and enhance long-term energy security in a region heavily dependent on imports.
