Petrol Likely to Average Above N900/Litre in 2026 as CBN Flags Market Pressures
Nigeria’s petrol market is expected to remain under significant price pressure in 2026, with pump prices projected to hover around N905 to N950 per litre, according to fresh macroeconomic projections released by the Central Bank of Nigeria (CBN).
The outlook underscores the fragile balance between domestic refining gains, foreign exchange stability, and global crude oil dynamics in a post-subsidy environment.
In its 2026 Macroeconomic Outlook for Nigeria, the apex bank outlined baseline assumptions guiding its forecast, including moderate crude oil prices, steady domestic production, and gradual improvements in the foreign exchange market.
Despite recent price moderation triggered by aggressive pricing from the Dangote Petroleum Refinery, the CBN maintained that structural cost factors would keep petrol prices elevated in the medium term.
Petrol Price Outlook 2026 and the CBN’s Core Assumptions
The petrol price outlook 2026 is anchored on crude oil prices averaging $55 per barrel next year, down from an estimated $60 per barrel in the final quarter of 2025.
The bank also assumed an average Nigerian Foreign Exchange Market (NFEM) rate of N1,400 to the dollar in 2026, supported by stronger capital inflows, improved FX liquidity, and a narrowing current account deficit.
Domestic crude oil production is projected at approximately 1.5 million barrels per day throughout the forecast period, excluding condensates.
While this output level represents an improvement from previous years marked by theft and pipeline vandalism, it remains insufficient to fully insulate the downstream sector from external shocks.
Under these assumptions, the CBN expects premium motor spirit (PMS) prices to average around N950 per litre in 2026, slightly above current pump prices in several major cities.
“The baseline projections assume stable crude oil production, gradual FX market efficiency, and expansionary fiscal spending under the 2025–2027 Medium-Term Expenditure Framework,” the CBN stated.
Dangote Refinery’s Impact on Short-Term Petrol Pricing
Recent price movements in the downstream sector have been heavily influenced by the Dangote Petroleum Refinery, which slashed its gantry price from N828 to N699 per litre in December 2025.
This aggressive pricing move forced retail pump prices down to about N739 per litre at partner outlets, particularly MRS Oil stations, triggering a wave of price adjustments across the market.
Before the refinery’s intervention, petrol prices in many parts of the country hovered around N900 per litre, highlighting the extent to which domestic refining capacity can shape pricing outcomes.
However, industry analysts warn that these reductions may not be sustainable in the long run.
The refinery itself has acknowledged that its price cuts come at significant financial cost, both to local refiners and fuel importers operating in an increasingly competitive market.
Despite Nigeria’s growing domestic refining footprint, fuel imports continue to play a stabilising—yet risky—role in the supply chain.
The CBN noted that without local refining, petrol prices could climb as high as N1,400 per litre, particularly in a fully deregulated environment exposed to volatile exchange rates and shipping costs.
In a recent statement, the Dangote refinery echoed this concern, warning that unchecked import dependence would leave consumers vulnerable to price spikes driven by global supply disruptions and speculative trading.
“Large-scale domestic refining has become a critical stabilising force in the downstream petroleum market,” the refinery said, stressing that local production has helped moderate pump prices since subsidy removal.
Inflation, Competition, and the Midstream Factor
While petrol prices are projected to remain high, the CBN expressed cautious optimism that increased competition in the midstream and downstream sectors could help moderate costs over time.
According to the bank, rising participation by traders and depot owners may exert downward pressure on PMS prices, particularly as logistics efficiencies improve.
The petrol price outlook 2026 also feeds into broader inflation projections. The CBN expects headline inflation to decline sharply to 12.94 per cent in 2026, compared with an estimated 21.26 per cent in 2025.
This anticipated moderation is largely attributed to easing food prices and gradual declines in energy costs.
Global trends support this outlook. The apex bank projects a 6.99 per cent drop in global energy prices in 2026, driven by lower oil prices as Brent crude is expected to average around $61 per barrel.
Agricultural commodity prices are also forecast to decline modestly, reflecting improved supply conditions and softer global demand.
Economic Growth and Investor Sentiment
Beyond pricing, the CBN highlighted the positive spillover effects of increased private-sector investment, particularly in refining and energy infrastructure.
The expansion of domestic crude processing capacity, improved security around oil assets, and the establishment of production monitoring systems are expected to support economic growth in 2026.
According to the bank, stronger investor confidence and improved business sentiment could help stabilise the macroeconomic environment, even as consumers grapple with higher fuel costs.
Government spending is projected to follow an expansionary path in line with the $1 trillion economy ambition, while monetary policy parameters—including the Monetary Policy Rate and Cash Reserve Ratio—are expected to remain tight to curb inflationary pressures.
What It Means for Consumers
For Nigerian households and businesses, the petrol price outlook 2026 suggests limited relief at the pump, despite intermittent price reductions driven by local refiners.
Transportation costs, logistics expenses, and energy-dependent services are likely to remain elevated, placing continued pressure on disposable income.
Analysts say sustained price stability will depend on a combination of factors, including consistent crude supply, exchange rate discipline, and a transparent, competitive downstream market.
As Nigeria navigates its post-subsidy reality, the coming year will test whether domestic refining capacity and regulatory reforms can deliver lasting price relief—or merely soften the impact of an increasingly expensive energy landscape.
