Key highlights
- Nigerians paid an average of N840 per litre for diesel in March 2023.
- Diesel was cheapest in Bayelsa, Katsina and Edo states.
- Global markets will always affect diesel prices in Nigeria because of the lack of local refining capacity.
Diesel prices rose to N840 per litre in March 2023, according to data from the Diesel Price Watch Report from the National Bureau of Statistics (NBS).
Between March 2022 and March 2023, diesel prices went from N539.52 per litre to N840.81 per litre, a whopping 55.90% increase.
During the month highlighted, Nigerians in Bauchi paid an average of N910.46 per litre for diesel, in Abuja, diesel cost N889.44 and in Adamawa, people paid N880.33 per litre for diesel. The commodity was cheapest in Bayelsa at N768.04 per litre, in Katsina at N779.78 per litre and in Edo at N797.14 per litre.
Prices by zones
According to the report, states in the Northeast recorded an average price of N856.42 per litre. The North Central zone recorded N856.12 per litre, the Northwest recorded N824.89 per litre. Meanwhile, the Southeast recorded N841.89 per litre, the Southwest recorded N848.90 per litre and the South-Soutth recorded N816.92 per litre during the period highlighted.
More insights into the diesel price increase
Diesel price fluctuations can result from a complex combination of some factors. Nigeria is heavily reliant on imports to meet its domestic demand as it currently has no local refining capacity. If global oil prices rise, it can lead to an increase in the cost of diesel imports, which in turn, can lead to higher diesel prices in the domestic market.
The value of the Naira, against major foreign currencies like the US Dollar, can also impact diesel prices. If the Naira depreciates against the Dollar, it can make diesel imports costlier, leading to a rise in diesel prices.
Aside from being fully deregulated, the demand for diesel in Nigeria has been increasing. If the supply of diesel does not keep pace with the rising demand, it can lead to an increase in prices.
Meanwhile, last week, Bloomberg reported that diesel demand is dropping in the global markets and flashing recession signs. According to Bloomberg, this is an early signal of weaker industrial activity and reduced consumer spending, and the pullback has recession watchers on high alert.
When demand for diesel drops, it can suggest that these industries are slowing down, which can in turn lead to reduced employment, weaker consumer spending, and other negative economic effects.
However, many factors can influence diesel demand, including shifts in technology, changes in government policy, and fluctuations in global energy markets.
What you should know
Diesel demand can be an important indicator of economic activity because it is used in a wide range of industries, including transportation, construction, and manufacturing.
