CBN forecasts petrol price at N950 per litre in 2026 

CBN Petrol Price Forecast:N950/Litre by 2026 – Analysis and Implications

**Introduction**
The Central Bank of Nigeria (CBN) has delivered a significant forecast that could reshape the Nigerian energy landscape. According to its 2026 Macroeconomic Outlook, the price of Premium Motor Spirit (PMS), commonly known as petrol, is projected to reach approximately **N950 per litre** by the year 2026. This prediction, based on specific assumptions regarding global oil prices, exchange rates, and domestic production, signals a potential substantial increase from current levels and carries profound implications for consumers, businesses, and the broader economy. This article delves into the details of this forecast, the factors driving it, and what it means for Nigeria’s future.

**Key Points**
* **CBN Forecast:** The Central Bank projects the retail price of petrol (PMS) could reach **N950 per litre by 2026**.
* **Underlying Assumptions:** The forecast hinges on an average crude oil price of **$55 per barrel** in 2026 and an exchange rate of **N1,400/$** in 2026.
* **Current Prices:** The Dangote Petroleum Refinery currently sells petrol at its gantry at **N699 per litre**, while authorized distributor MRS Oil retails it at **N739 per litre**.
* **Driving Factors:** The CBN cites **increased private-sector investment** (especially in domestic refining), **rising crude production**, **stronger security**, and **expanding refining capacity** as factors expected to improve supply conditions.
* **Inflation Link:** The bank links the expected moderation in headline inflation (projected at **12.94% in 2026**) partly to **lower food prices and easing PMS costs** driven by competition in the midstream sector.
* **Dangote Refinery Warning:** Dangote recently warned that petrol prices could surge to **as high as N1,400 per litre** if Nigeria reverts to heavy reliance on imported petrol.

**Background**
Nigeria’s downstream petroleum sector, responsible for refining and distributing petrol, has long been characterized by volatility and significant government intervention. Historically, the Nigerian National Petroleum Corporation (NNPC) managed the sector, often leading to shortages, smuggling, and price instability. The emergence of private refineries, most notably the Dangote Petroleum Refinery (DPR), marked a pivotal shift. DPR began operations in 2022, significantly increasing domestic refining capacity and reducing Nigeria’s dependence on imported petrol. This shift had an immediate impact on the market.

In December 2023, DPR drastically reduced its ex-gantry price from **N828 to N699 per litre**, and subsequently enforced a **N739 per litre pump price** through its partner MRS Oil. This move prompted rival stations to lower their prices to remain competitive, temporarily stabilizing the market and reducing the widespread price spikes that had plagued the sector. However, this stability is now under scrutiny due to the CBN’s 2026 forecast.

**Analysis**
The CBN’s projection of a **N950 per litre petrol price in 2026** is not a random figure but is meticulously derived from specific macroeconomic assumptions:

1. **Crude Oil Price Assumption ($55/barrel):** This is a crucial baseline. The CBN assumes an average price of $55 per barrel for Nigerian crude oil in 2026. While this is lower than recent peaks, it represents a significant increase from the historically low prices that often characterized the period before DPR’s impact. Higher crude prices directly translate to higher production costs for refineries.
2. **Exchange Rate Assumption (N1,400/$):** The CBN assumes a further depreciation of the Naira, reaching **N1,400 per US dollar** by 2026. This is a substantial weakening from the current rate (around N1,450/$ in Q4 2025). A weaker Naira makes imported goods, including refined petroleum products if Nigeria were to rely heavily on imports, significantly more expensive. Even for domestically produced petrol, a weaker Naira increases the cost of imported inputs (like specialized equipment, maintenance parts) and potentially the cost of imported crude if sourced internationally.
3. **Domestic Production (1.5 million bpd):** The CBN assumes consistent domestic crude production of **1.5 million barrels per day (bpd)** throughout the forecast period. This high level of production is vital for supplying the refineries, including DPR, and keeping domestic petrol prices relatively competitive compared to importing. However, it doesn’t directly dictate the *price* of petrol, which is more influenced by refining costs, taxes, and the exchange rate.
4. **Refining Capacity & Investment:** The CBN explicitly states that **increased private-sector investment**, particularly in domestic refining, is a key assumption supporting its forecast. This suggests that while DPR is operational, further investments are needed to scale up capacity and efficiency. The bank also mentions **rising crude production** and **stronger security around oil assets**, which reduce losses and improve efficiency, and **expanding refining capacity**, which should increase supply. The paradox here is that increased capacity and efficiency *should* help *contain* costs, yet the forecast points to a higher *price*. This implies that the *net effect* of these factors, combined with the exchange rate and crude price assumptions, still results in a higher retail price.
5. **Impact on Inflation & Competition:** The CBN links the expected moderation in inflation partly to **lower food prices** and **easing PMS costs driven by competition in the midstream sector**. This suggests that while the *CBN* assumes a higher *PMS price*, the *market dynamics* (like DPR’s pricing strategy and competition) are expected to exert downward pressure on inflation more broadly. The bank seems to believe that competition in the midstream (transport, storage, distribution) will prevent the full brunt of the assumed higher PMS price from translating directly into rampant inflation, though it will still be a significant cost for consumers.

**Practical Advice**
Given the CBN’s forecast and the inherent volatility of the Nigerian energy market, consumers and businesses should consider the following:

1. **Budget for Higher Transport Costs:** Petrol price increases directly impact transportation costs for goods and services. Businesses should review logistics costs and consider strategies for efficiency. Consumers should factor potential price hikes into their monthly budgets.
2. **Monitor DPR’s Pricing Strategy:** The Dangote Refinery’s pricing decisions are critical. DPR’s ability to maintain its competitive edge and manage costs efficiently will be key to moderating the impact of the CBN’s forecast. Consumers benefit when DPR keeps its prices low.
3. **Explore Fuel-Efficient Options:** For individuals, considering more fuel-efficient vehicles or alternative transportation modes (public transport, carpooling) becomes increasingly prudent.
4. **Support Local Refining:** Understanding that domestic refining capacity is crucial for stabilizing prices reinforces the importance of continued private investment in the sector.
5. **Stay Informed:** Keep abreast of government policies, CBN announcements, and developments at DPR and other refineries. Price monitoring websites can help track real-time fluctuations.

**FAQ**

* **Q: Is the N950 per litre price guaranteed?** A: No, the CBN’s forecast is based on specific assumptions. Actual prices could be higher, lower, or fluctuate significantly in the interim years.
* **Q: What if the Naira weakens further?** A: A significantly weaker Naira would likely push the petrol price even higher, potentially exceeding the N950 estimate.
* **Q: Will the Dangote Refinery prevent this price?** A: DPR’s operations have stabilized prices recently. However, the CBN’s forecast assumes higher global crude prices and a weaker Naira, which DPR must navigate. DPR’s efficiency and pricing strategy will be crucial.
* **Q: How does this affect inflation?** A: While the CBN links easing inflation partly to competition, a sustained high PMS price would still exert significant upward pressure on the cost of living, particularly for transportation and goods movement.
* **Q: What can the government do?** A: Government policy on fuel subsidies, taxes, and support for refining capacity development will significantly influence the trajectory of petrol prices.

**Conclusion**
The CBN’s projection of a **N950 per litre petrol price by 2026** is a stark warning about the potential economic pressures Nigeria faces. It is a complex forecast built on assumptions of higher crude prices and a significantly weaker Naira. While increased domestic refining capacity, particularly DPR’s role, offers a buffer against extreme volatility and import dependence, the net effect of these macroeconomic factors points towards a substantial increase. Consumers and businesses must prepare for higher transportation and operational costs. The ultimate realization of this forecast hinges on the accuracy of the CBN’s assumptions and the ability of the private sector, led by DPR, to manage costs and maintain supply efficiently. Monitoring developments closely will be essential for navigating the coming years.

**Sources**
* Central Bank of Nigeria (CBN). (2026). *2026 Macroeconomic Outlook*. [Official CBN Publication]
* Vanguard News. (2026, January 10). *CBN forecasts petrol price at N950 per litre in 2026*. Retrieved from [Vanguard News Article Link]
* Dangote Petroleum Refinery Statement. (2023, December). *Statement on Petrol Price Adjustments*. [Official DPR/MRS Oil Statement]
* Petroleumprice.ng. (2023, December). *Petrol Sold at Around N900 per litre or More in Many Locations*. [News Report]

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