Business

Why Commodity Prices’ll Remain High In Nigeria, Others – World Bank

Published

3 years ago

May 15, 2022

The World Bank has said that the war in Ukraine has dealt a major shock to commodity markets, altering global patterns of trade, production, and consumption in ways that will keep prices at historically high levels through the end of 2024.

The World Bank said this in its latest Commodity Markets Outlook report.

According to a new report by the Washington-based bank titled, “Food and energy price shocks from Ukraine war could last for years,” the increase in energy prices over the past two years had been the largest since the 1973 oil crisis. Price increases for food commodities—of which Russia and Ukraine are large producers—and fertilizers, which relied on natural gas as a production input, had been the largest since 2008.

“Overall, this amounts to the largest commodity shock we’ve experienced since the 1970s. As was the case then, the shock is being aggravated by a surge in restrictions in the trade of food, fuel and fertilizers,” said the World Bank’s Vice President for Equitable Growth, Finance, and Institutions, Indemit Gill

“These developments have started to raise the spectre of stagflation. Policymakers should take every opportunity to increase economic growth at home and avoid actions that will bring harm to the global economy.”

According to the report, energy prices were expected to rise more than 50 per cent in 2022 before easing in 2023 and 2024. Non-energy prices, including agriculture and metals, are projected to increase almost 20 per cent in 2022 and will also moderate in the following years.

Nevertheless, commodity prices are expected to remain well above the most recent five-year average. In the event of a prolonged war or additional sanctions on Russia, prices could be even higher and more volatile than currently projected.

Because of war-related trade and production disruptions, the World Bank predicts the price of Brent crude oil at an average of $100 a barrel in 2022, its highest level since 2013 and an increase of more than 40 per cent compared to 2021. Prices are expected to moderate to $92 in 2023—well above the five-year average of $60 a barrel. Natural gas prices (European) are expected to be twice as high in 2022 as they were in 2021, while coal prices are expected to be 80 per cent higher, with both prices at all-time highs.

“Commodity markets are experiencing one of the largest supply shocks in decades because of the war in Ukraine,” said Director of the World Bank’s Prospects Group, Ayhan Jose, which produces the Outlook report.

“The resulting increase in food and energy prices is taking a significant human and economic toll—and it will likely stall progress in reducing poverty. Higher commodity prices exacerbate already elevated inflationary pressures around the world.”

The report said wheat prices were forecast to increase more than 40 per cent, reaching an all-time high in nominal terms this year. That will put pressure on developing economies that rely on wheat imports, especially from Russia and Ukraine. Metal prices are projected to increase by 16 per cent in 2022 before easing in 2023 but will remain at elevated levels.

“Commodity markets are under tremendous pressure, with some commodity prices reaching all-time highs in nominal terms,” said Senior Economist in the World Bank’s Prospects Group, John Baffes.

“This will have lasting knock-on effects. The sharp rise in input prices, such as energy and fertilizers, could lead to a reduction in food production particularly in developing economies. Lower input use will weigh on food production and quality, affecting food availability, rural incomes, and the livelihoods of the poor.”

PUNCH.

Business

Naira Depreciates Against Dollar

Published

3 days ago

July 4, 2025

Editor

The Naira experienced a slight depreciation on Friday at the official market, trading at N1,528.56 to the dollar.

Data obtained from the website of the Central Bank of Nigeria (CBN) showed that the Naira lost N2.73.

This represents a 0.17 percent loss compared to the N1,525.82 recorded on Thursday.

The Naira, which opened the week on Monday with a gain of N9.52 against the dollar, held steady gains until Thursday.

On Wednesday, the local currency gained N3.42 against the dollar and received commendation from the International Monetary Fund (IMF).

The IMF, in its 2025 Article IV Consultation report on Nigeria, commended the CBN for its reforms to the foreign exchange market, which supported price discovery and liquidity.

Business

JUST IN: Dangote Refinery Hikes Petrol Ex-depot Price

Published

2 weeks ago

June 20, 2025

Editor

Nigerians may soon pay more for petrol as the Dangote Petroleum Refinery on Friday increased its ex-depot price for Premium Motor Spirit to N880 per litre, raising fresh concerns over fuel affordability and price volatility in the downstream sector.

Checks on petroleumprice.ng, a platform tracking daily product prices, and a Pro Forma Invoice seen by The PUNCH confirmed the hike, representing a N55 increase from the previous rate of N825 per litre.

The increment would ripple across the entire fuel distribution chain, likely pushing pump prices above N900/litre in some parts of the country, especially in areas far from the distribution hubs.

The hike comes despite global crude prices falling. Brent crude dipped by 3.02% to $76.47, WTI fell to $74.93, and Murban dropped to $76.97 on Friday. The decline in benchmarks offers little relief due to persistent fears of sudden supply disruptions.

The refinery has increased its reliance on imported U.S. crude and operational costs amid exchange rate instability, which adds to its pricing pressure.

On Thursday, the President of the Dangote Group, Aliko Dangote, said his 650,000-barrel capacity refinery is “increasingly” relying on the United States for crude oil.

This came as findings showed that the Dangote Petroleum Refinery is projected to import a total of 17.65 million barrels of crude oil between April and July 2025, beginning with about 3.65 million barrels already delivered in the past two months, amid ongoing allocations under the Federal Government’s naira-for-crude policy.

Dangote informed the Technical Committee of the One-Stop Shop for the sale of crude and refined products in naira initiative that the refinery was still battling crude shortages, which had led it to resort to imports from the United States.

On Monday, the president of the Petroleum and Natural Gas Senior Staff Association of Nigeria, Festus Osifo, accused oil marketers of exploiting Nigerians through inflated petrol prices, insisting that the current pump price of PMS should range between N700 and N750 per litre.

He criticised the disparity between falling global crude oil prices and the stagnant retail price of petrol in Nigeria.

“If you go online and check the PLAT cost per cubic metre of PMS, convert that to litres and then to our Naira, you will see that with crude at around $60 per barrel, petrol should be retailing between N700 and N750 per litre.”

He asserted that if Nigerians bear the brunt of higher fuel costs, they should be allowed to enjoy the benefit of low pricing.

His forecast of increased costs now appears spot on, considering the latest developments.

Marketers are already adjusting. Depot owners and fuel distributors in Lagos and other cities anticipate a domino effect, with new price bands expected to follow Dangote’s lead.

Many had held back pricing decisions since Tuesday, when the refinery halted sales and withheld fresh PFIs. The delay fueled speculation, allowing opportunistic price hikes across various depots.

Business

Naira Appreciates At Official Market

Published

1 month ago

May 24, 2025

Editor

The Naira, which has seen steady appreciation against the Dollar all week, closed stronger on Friday, trading at ₦1,580.44 in the official forex market.

Data from the Central Bank of Nigeria’s website show the Naira gained ₦4.51k against the Dollar on Friday alone.

This marks a 0.28 per cent appreciation from Thursday’s closing rate of ₦1,584.95 in the official foreign exchange window.

The local currency maintained consistent strength throughout the week, recording gains daily.

On Monday, May 19, it traded at ₦1,598.68; on Tuesday, at ₦1,590.45; and on Wednesday, at ₦1,584.49.

These gains suggest increased investor confidence and improved forex supply, contributing to the naira’s performance.

Meanwhile, the CBN, at its 300th Monetary Policy Committee meeting held Monday and Tuesday, retained the Monetary Policy Rate at 27.5 per cent.