MEMAN Explains Why Petrol Prices Rise Faster Than They Fall

By: Amarachi Okonkwo

The Major Energy Marketers Association of Nigeria has provided a detailed explanation for the persistent pattern in Nigeria’s petrol market where prices rise quickly but decline more slowly, citing cost recovery pressures, inventory dynamics, and global market volatility.

Speaking during a webinar hosted by the association, MEMAN Chairman Hubb Stokman said the trend is not unique to Nigeria but reflects broader market behaviour in response to fluctuations in international oil prices. According to him, when global prices surge, marketers are compelled to adjust pump prices rapidly to remain operational.

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He explained that the urgency is driven by the need to generate sufficient working capital to procure subsequent fuel supplies. “When prices go up sharply, dealers must quickly recover costs to fund the next shipment.

This is not peculiar to fuel alone; similar patterns exist across fast-moving consumer goods,” Stokman noted.

Failure to adjust prices promptly, he warned, could leave marketers unable to restock, potentially leading to supply disruptions in the domestic market.

However, the reverse scenario, when global prices decline tends to unfold more gradually. Stokman attributed this to existing inventories purchased at higher costs, which marketers must first exhaust before reflecting lower prices at the pump. He added that operators often adopt a cautious approach to price reductions to avoid market instability.

“This gradual adjustment acts as a ‘parachute,’ helping to smooth out volatility and prevent sharp price swings that could destabilise the market,” he said.

Stokman further observed that periods of heightened geopolitical tension, particularly in oil-producing regions, tend to amplify price volatility. He cited ongoing instability in the Middle East as a key factor influencing recent market movements.

He emphasised that Nigeria’s downstream petroleum sector, now largely deregulated, is tightly linked to international pricing benchmarks. As a result, domestic petrol prices are significantly influenced by global crude oil prices and foreign exchange dynamics under the import parity pricing model.

Also speaking at the webinar, energy expert Joe Nwakwue highlighted Nigeria’s continued exposure to global oil market fluctuations. He noted that any event affecting Brent crude prices is quickly transmitted to the local market.

While acknowledging that initiatives such as the naira-for-crude policy could mitigate some external pressures, Nwakwue stressed that the structural nature of the market makes complete insulation from global shocks unlikely.

He underscored the importance of maintaining a competitive and contestable market environment to ensure fair pricing. According to him, the presence of importers plays a critical role in preventing monopolistic pricing and keeping domestic refiners in check.

“In practical terms, a refinery will price competitively if it knows importers can bring in products and sell at market margins,” he said, adding that continued access to imports remains essential for market balance.

The explanations come amid growing public concern over frequent fuel price fluctuations, with stakeholders calling for clearer regulatory frameworks and targeted measures to cushion the impact on consumers.