Fuel queues resurfaced strongly and unexpectedly within the Lagos metropolis yesterday as motorists waited long hours at gas stations to fill their tanks. This is even as petroleum product marketers declined to go ahead with the importation of petrol for the fourth quarter despite Federal Government’s approval of the import allocation for the quarter.
Although the government had paid part of the subsidy arrears owed them, oil marketers said they were unwilling to import more products owing to falling value of the naira to the dollar, coupled with the fear that subsidy arrears could be delayed again.
Oil prices continued the downward trend yesterday as Brent crude, against which Nigeria’s oil is priced, hit $66 per barrel, just a little above the country’s new benchmark price for 2015 budget.
With the naira exchanging for N189 to a dollar, the marketers said the impact of a delayed payment for subsidy arrears could be very grave if the naira continued to fall.
This situation has resulted in some filling stations not selling fuel in some parts of Lagos.
SHIPS & PORTS DAILY gathered that product loading had diminished at the depots. Loading was said to have dropped by over 30 per cent.
The Chairman, Nigeria Union of Petroleum and Natural Gas Workers, Lagos Zone, Alhaji Tokunbo Korodo, confirmed that “loading had dropped drastically”.
He said, “It is very important to know why marketers are not loading despite the recent payment of subsidy arrears by government and the approval of the fourth quarter import allocation for Premium Motor Spirit. The situation is very clear. The dollar is fast appreciating against the naira. Oil marketers are not comfortable to go into importation.
“This will, very likely, worsen by next week. I pray this does not disrupt the festive period.”
Meanwhile, international benchmark Brent crude was down yesterday by more than four per cent to as low as $66 per barrel, its lowest level since 2009. The United States’ West Texas Intermediate also lost more than three per cent and cracking $64 per barrel for the first time since 2009.
Brent had recently tumbled below $70 per barrel after OPEC decision on November 27 to maintain production quotas. It hovered around $72 for the most of last week.
Industry analysts have said that given the continued oversupply in the market being largely driven by the US shale production, prices will likely continue to head south.
Oil prices have fallen more than $40 per barrel since June when oil peaked at $115 per barrel. The decline was triggered by several factors including fall in demand and supply glut largely driven by shale oil boom in the United States.
“Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015,” a US Morgan Stanley analyst, Adam Longson, said.
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