According to the reports gathered of lower diesel inventories in Europe, alongside claims that Russian oil refiners have started to cut back on refinery output due to sanctions imposed on Russia, these has raised concerns that diesel may become inaccessible for many Nigerian businesses and homes.
Up until last week when diesel prices eased due to a fall in the oil prices, diesel was sold for about N800 per litre, forcing a clamour from both the rich and many involved in businesses.
Following the report that inventories of the product are low and the gradual return of the oil rally, the price of diesel may skyrocket again, with implications for higher inflation in the economy.
According to experts, distillate production may have to be raised above consumption for a period to rebuild the stocks to a more comfortable level, as agency reports that the Europe’s diesel shortage was becoming worse as Russian refineries cut back on refinery production.
The Chief Executive of Guvnor Global Commodities Trading, Torbjorn Tornqvist, said that the Financial Times Commodities Summit that, “The diesel crisis is a global problem but for Europe, it’s even more serious as Europe is so short on diesel.”
Other developed countries such as; France, Germany, Hungary and Sweeden are also been massively hit by the energy crisis as fuel shortages begin to persist in their countries. In the United States, the situation remains grave as their diesel inventories are 21 percent lower than pre-pandemic five-year seasonal average, which translates into 30 million barrels.
Similarly in Singapore, a global energy trade hub, diesel fuel inventories are 4 million barrels below the seasonal five-year average from before the pandemic.
For Nigeria, the situation has remained the same as that of the global economy as the price of diesel rose from N300 at the beginning of the year to over N700 per litre, putting the cost beyond the reach of the producers.
The Manufacturers Association of Nigeria (MAN) had equally warned that the current diesel price challenge could spell doom for many companies that have been struggling to survive under the burden of high cost.
The association said that the manufacturers who largely rely on diesel to run their factories, are contending with a huge cost to sustain their production line.
This has imposed direct implication on the economy as many Nigerians are already feeling the heat with the reflective cost of goods in the market rising, due to the high cost of production.
- Diesel price rose from N300 per litre at the beginning of the year to about N800 per litre recently due to the Russian-Ukraine energy crisis arising from Russia’s invasion of Ukraine.
- The European Union and its allies have imposed various sanctions on Russia due to its attack of Ukraine and are still having meetings on imposing more sanctions on Russia.
- Manufacturers Association of Nigeria had earlier warned that the hike in diesel price might lead to massive job loss in the economy since manufacturers majorly depend on the expensive self-generated power to produce goods.