- Federal Government (FG) is maintaining market-based fuel pricing despite global moves to cushion rising energy costs.
- The government sees higher oil prices as an opportunity to boost domestic production and refining.
Governments across the world are introducing fuel subsidies, price controls and other measures to limit the impact of the US-Iran conflict.
The Federal Government of Nigeria is maintaining its market-based approach despite rising petrol and diesel costs. The disruption to energy shipments through the Strait of Hormuz has pushed up fuel prices and increased pressure on households and businesses. In response, the International Energy Agency (IEA) said more than 115 countries had introduced measures to manage the shock.
About 94 countries have adopted price-support policies. These include fuel subsidies, price caps and tax reductions. Another 58 governments have introduced measures to reduce energy consumption. Meanwhile, 30 countries have announced longer-term policies focused on efficiency, electrification and renewable energy.
IEA officials said such measures could reduce demand but could not replace the large volumes of oil and gas normally moving through the Strait of Hormuz. Nigeria has taken a different path. Petrol prices climbed above N1,300 per litre in some areas before settling around N1,200. The increase has also raised transport costs and added pressure on food prices and businesses.
Energy economist Prof. Adeola Adenikinju urged the Federal Government to use additional oil revenue to support vulnerable Nigerians. He said rising crude prices could provide the government with funds for targeted assistance. Such support, he added, should reach informal workers and private-sector employees as well as civil servants.
Industry groups have made similar calls. The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) wants measures that can reduce transportation costs. Its president, Billy Gillis-Harry, said the government should share some of the benefits from higher crude prices with consumers.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) also called for lower taxes and charges on petroleum products. The association said reducing fees from agencies such as NIMASA, NPA and NMDPRA could help lower pump prices. IPMAN spokesman Chinedu Ukadike also urged the government to rehabilitate petroleum pipelines. He said greater pipeline use would reduce the cost of moving fuel by road.
The Lagos Chamber of Commerce and Industry wants the crisis to drive greater investment in domestic refining and alternative fuels. Similarly, the Centre for the Promotion of Private Enterprise called for incentives for local refiners and more investment in mass transit.
The Federal Government has rejected a return to fuel subsidies, however. Finance Minister Taiwo Oyedele said the administration would maintain market-driven pricing. He argued that subsidies create economic distortions and that price controls could discourage investment. The government removed the petrol subsidy in May 2023. Pump prices then rose from about N200 per litre to more than N500.
Prices later climbed to around N1,200 before increased local refining capacity helped bring them down. By February 2026, petrol averaged about N830 per litre.
Oyedele said the government would continue regulating the downstream market. He also promised measures to prevent fuel suppliers and marketers from exploiting consumers. He described the Middle East crisis as a potential opportunity for Nigeria. According to him, global energy markets may seek new sources of supply as countries reduce their dependence on existing routes.
Nigeria could benefit by attracting investment into oil production, refining and other parts of the energy sector, he said. The global response is also extending beyond petroleum. The IEA reported stronger sales of heat pumps and electric vehicles in several markets during the first quarter of 2026.
Electric car sales rose sharply in India, South Korea and Southeast Asia. Japan also introduced electricity and natural gas subsidies, while India moved to limit industrial gas consumption. These measures are coming as global liquids demand weakens. S&P Global Energy CERA reported that demand fell to 99.2 million barrels per day in May 2026, from 105.1 million bpd a year earlier.
For Nigeria, the debate now centres on how to protect consumers without reversing the market reforms that ended fuel subsidies.