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Forecasting Petrol Prices in Nigeria: What to Expect by 2026
The Central Bank of Nigeria (CBN) has released projections indicating that the cost of Premium Motor Spirit (PMS), commonly referred to as petrol, may escalate to approximately ₦950 per litre by the year 2026. This forecast reflects ongoing shifts in the energy sector and economic variables influencing fuel pricing.
Current Pricing Landscape and Market Players
At present, the Dangote Petroleum Refinery has set its ex-gantry price at ₦699 per litre. Meanwhile, MRS Oil, an authorized distributor, retails petrol at ₦739 per litre. These prices have recently seen adjustments following strategic moves by key industry players to stabilize the market.
Economic Assumptions Underpinning the CBN’s Outlook
In its 2026 Macroeconomic Outlook report, the CBN’s petrol price forecast is based on several critical assumptions. The bank anticipates an average crude oil price of $55 per barrel throughout 2026. Additionally, it projects the exchange rate to average around ₦1,451.63 to the US dollar in the last quarter of 2025, easing slightly to ₦1,400 in 2026. These figures are supported by expectations of enhanced foreign exchange market efficiency, increased capital inflows, and a projected current account surplus.
Production and Supply Dynamics
The forecast also assumes that Nigeria’s domestic crude oil output will maintain a steady level of approximately 1.5 million barrels per day during this period. The CBN highlights that growth in private sector investments, especially in local refining capacity, will be pivotal in supporting economic expansion and mitigating energy costs. Improvements in crude oil production, enhanced security around oil infrastructure, and the expansion of refining facilities are expected to collectively improve fuel supply conditions by 2026.
Inflation Trends and Market Competition
The CBN anticipates headline inflation to decelerate to 12.94% in 2026, a significant drop from the estimated 21.26% in 2025. This easing is attributed to anticipated reductions in food prices and a moderation in petrol costs, driven by heightened competition within the midstream sector of the oil industry.
Impact of Refinery Pricing Strategies
Fuel prices experienced a notable decline after the Dangote Petroleum Refinery lowered its ex-gantry price from ₦828 to ₦699 per litre and set a pump price of ₦739 per litre through its partner, MRS Oil. This move in mid-December prompted competing fuel stations to reduce their prices to maintain customer loyalty, illustrating the influence of domestic refining on market pricing.
Risks of Increased Fuel Import Dependence
The Dangote Petroleum Refinery has cautioned that petrol prices could surge to as high as ₦1,400 per litre if Nigeria reverts to heavy reliance on imported fuel. The refinery emphasizes that robust local production has been instrumental in stabilizing the downstream market and curbing price volatility, underscoring the importance of sustaining and expanding domestic refining capabilities.
Looking Ahead: Strategic Implications for Nigeria’s Energy Sector
As Nigeria navigates its energy future, the interplay between crude oil prices, exchange rates, domestic production, and refining capacity will be crucial in shaping petrol prices. The CBN’s projections highlight the need for continued investment in local refining infrastructure and policies that enhance market efficiency to ensure affordable and stable fuel supply for consumers.
