The Central Bank of Nigeria has projected that the price of Premium Motor Spirit, commonly known as petrol, could rise to about N950 per litre in 2026, reflecting a combination of global oil market conditions, exchange rate assumptions, and domestic supply dynamics. The projection, contained in the bank’s 2026 Macroeconomic Outlook, has renewed debate about fuel affordability, inflation trends, and the pace of reforms in Nigeria’s downstream petroleum sector.

The forecast comes at a time when pump prices have recently eased from earlier highs, largely due to increased domestic refining output and intensified competition among fuel marketers. However, the CBN’s outlook suggests that these gains may face pressure over the medium term as macroeconomic fundamentals continue to evolve.

Current petrol prices and recent movements

As of now, petrol prices remain below the level projected by the CBN for 2026. The Dangote Petroleum Refinery, Nigeria’s largest privately owned refinery, currently sells petrol at a gantry price of N699 per litre. At the retail end, MRS Oil, an authorised distributor of Dangote refinery products, has been selling petrol at N739 per litre.

According to Petroleumprice.ng, petrol had sold for about N900 per litre or more in many locations across the country before December. Prices moderated after the Dangote refinery reduced its ex gantry price from N828 to N699 per litre. The platform noted that the refinery subsequently enforced a N739 per litre pump price through its retail partner, MRS Oil. When MRS outlets adopted the new rate in mid December, rival filling stations adjusted their prices downward to remain competitive.

This recent price adjustment offered temporary relief to consumers who have been grappling with rising transport and living costs since the removal of fuel subsidies in 2023.

CBN assumptions behind the 2026 forecast

In its outlook, the Central Bank anchored its petrol price projection on several key assumptions. According to the document, the bank expects an average crude oil price of $55 per barrel in 2026. It also assumes an average exchange rate of N1,451.63 to the dollar in the fourth quarter of 2025 and N1,400 to the dollar in 2026.

The CBN said these exchange rate assumptions are supported by improved efficiency in the foreign exchange market, stronger capital inflows, and a current account surplus. In addition, the bank assumed domestic crude oil production of about 1.5 million barrels per day throughout the forecast period.

Under these conditions, the CBN expects petrol prices to hover around N950 per litre in 2026, even as domestic refining capacity expands.

Domestic refining and cost containment

The CBN acknowledged the role of private sector investment in domestic refining, particularly the Dangote Petroleum Refinery, in helping to stabilise fuel supply and moderate prices. According to the bank, increased investment in local refining will support economic growth and help contain energy costs over time.

The outlook also highlighted expectations of rising crude oil production, improved security around oil assets, and expanding refining capacity as factors that could improve supply conditions in 2026. These developments, the bank said, would reduce Nigeria’s exposure to international supply disruptions and foreign exchange volatility associated with fuel imports.

Industry analysts note that while domestic refining reduces import costs, petrol prices will still reflect global crude prices, exchange rates, logistics, and operational expenses. This means that even with local production, pump prices are unlikely to return to pre subsidy levels.

Inflation outlook and wider economic impact

The CBN also projected that headline inflation would moderate to 12.94 percent in 2026, down from an estimated 21.26 percent in 2025. The bank linked the expected slowdown to easing food prices and lower pressure from petrol costs, driven by competition in the midstream segment of the oil and gas sector.

Economists say fuel prices play a central role in Nigeria’s inflation dynamics because of their direct impact on transportation, food distribution, and power generation. According to economic analyst Ayo Teriba, petrol prices often act as a transmission channel for broader cost increases.

“When petrol prices rise, the effect goes far beyond the filling station,” Teriba said in a recent interview with Channels Television. “Even when inflation is projected to slow, higher energy costs can delay that improvement if they filter into food and services.”

Warnings from the Dangote refinery

While the CBN’s projection places petrol at around N950 per litre in 2026, the Dangote Petroleum Refinery has issued a sharper warning. The company recently cautioned that petrol prices could rise to as high as N1,400 per litre if Nigeria returns to heavy reliance on fuel imports.

In a statement, the refinery said large scale local production has helped stabilise the downstream market and reduce price volatility. According to the company, dependence on imports would re expose Nigeria to global price shocks, shipping costs, and foreign exchange constraints, all of which could push pump prices significantly higher.

This warning underscores the strategic importance of sustaining domestic refining operations and ensuring consistent crude supply to local plants.

The CBN’s forecast matters because it provides an early signal to policymakers, businesses, and households about the likely direction of energy costs over the medium term. For transport operators, manufacturers, and small businesses, petrol price expectations influence planning, pricing decisions, and wage negotiations.

For the government, the outlook reinforces the need to deepen reforms in the oil and gas sector, improve infrastructure, and stabilise the foreign exchange market. It also highlights the importance of protecting vulnerable households from energy driven cost pressures through targeted social interventions.

Civil society groups argue that clearer communication around fuel pricing assumptions can help manage public expectations and reduce misinformation.

What to watch next

Analysts say several variables could alter the CBN’s projection, including changes in global oil prices, domestic production levels, security conditions in oil producing regions, and the pace of refining capacity expansion. Exchange rate stability will also remain a key factor.

There is also growing interest in how competition among refiners and marketers will shape pricing. As more modular refineries come on stream and distribution networks improve, pricing dynamics could shift further.

The Central Bank of Nigeria’s projection of petrol prices averaging around N950 per litre in 2026 reflects a cautious assessment of global and domestic economic conditions. While recent price reductions driven by local refining have provided some relief, the outlook suggests that energy costs will remain a significant factor in Nigeria’s economic landscape.

As reforms continue and investments in domestic refining deepen, the challenge for policymakers will be balancing market realities with affordability, ensuring that fuel pricing does not undermine broader efforts to stabilise inflation and support growth.