The World Bank has warned that the ongoing surge in global oil prices can directly add around 3.1 percentage points to Nigeria’s headline inflation, as rising fuel costs ripple through the economy.
The bank highlighted the widening gap between locally refined petrol and imported fuel as a key factor driving inflationary pressures in the downstream sector.
According to the World Bank’s latest Nigeria Development Update released in Abuja on Tuesday, where it noted that the current pricing structure has created a gap between locally refined fuel and import parity prices.
It also stated that imported petrol is about 12 per cent cheaper than fuel supplied by the Dangote Petroleum Refinery, reflecting distortions in the domestic pricing structure amid soaring global crude prices.
“Dangote refinery, the main supplier of refined petrol after the regulator ceased issuing import licences in early 2026, raised the ex-depot price of petrol to about N1,275 per litre as of March 23, 2026, compared to an estimated import-parity price of around N1,122 per litre, implying a cost differential of roughly 12 per cent,” the report said.
The World Bank noted that this development reflects broader pressures in the energy market following the Middle East conflict, warning that an increase in oil prices to about $80 per barrel—representing a 31.1 per cent rise relative to pre-conflict levels—could significantly worsen inflationary pressures.
“Overall, an increase in oil prices to about $80 per barrel… would directly add around 3.1 ppts to headline inflation under a full pass-through assumption,” the report stated, noting that indirect effects from higher fuel costs on transport, logistics, and food prices could push inflation even higher.
“Dangote refinery—the main supplier of refined petrol after the regulator ceased issuing import licences in early 2026—raised the ex-depot price of Premium Motor Spirit to about N1,275 per litre as of March 23, 2026, compared to an estimated import-parity price of around N1,122 per litre, implying a cost differential of roughly 12 per cent,” the report said.
The World Bank explained that this development reflects broader pressures in the energy market following the Middle East conflict, warning that an increase in oil prices to about $80 per barrel—representing a 31.1 per cent rise relative to pre-conflict levels—could significantly worsen inflationary pressures.
“Overall, an increase in oil prices to about $80 per barrel… would directly add around 3.1 ppts to headline inflation under a full pass-through assumption,” the report stated, noting that indirect effects from higher fuel costs on transport, logistics, and food prices could push inflation even higher.
Energy-related components, such as transport, account for roughly 10.1 per cent of Nigeria’s Consumer Price Index basket, meaning price shocks in fuel quickly transmit into broader price levels. “In addition to higher energy costs, the conflict is also likely to put upward pressure on food prices, as rising global food and fertiliser prices feed into domestic inflation,” the report added.
GIK/APA