By Toby TAIWO
Nigerians will have to brace up following the renewed hostility between the United States and Iran.
Iran has threatened total closure of the Strait of Hormuz amid new attacks from the US, which has created panic in the oil market, causing prices to rise by over 2 per cent.
Given that the Strait of Hormuz is among the most important shipping routes for global oil and liquefied natural gas, there are fears that prices will continue to rise if such disruptions persist.
If oil prices continue to remain high, seven everyday items could become more expensive for Nigerian households.
Among the essential items that will shoot up are Cooking Gas, Fuel, and everyday Groceries.
Though Nigeria has vast reserves of gas, it is largely untapped and generally flared. A substantial portion of its cooking gas is imported.
The price of cooking gas has reportedly gone up from the initial 900 Naira per Kg to 1500 Naira. A prolonged disruption could push up import costs, eventually affecting domestic pricing. Without any form of subsidy, the people will have to bear the brunt.
Fuel and Diesel
Prices of fuel and diesel had shot up by more than 100 percent since the beginning of the hostility in the Gulf region. This is a blow that the Nigerian consumer has felt recently with the hike in prices of petrol, diesel, and CNG. Even if retail fuel prices do not rise immediately, sustained crude prices near or above $100 a barrel would increase pressure on oil marketing companies and the government. Higher transport fuel costs eventually ripple through the economy, affecting everything from deliveries to public transport. The ease in price that was occasioned by the truce will resume in price increment with the recent onslaught.
Groceries
Biscuits, chips, instant noodles, edible oils and other packaged products are vulnerable to a double hit.
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Manufacturers face higher logistics costs, while many packaging materials are derived from petrochemicals. If crude remains elevated, companies may either raise prices or reduce pack sizes. Many ingredients used in detergents, cleaners and personal care products originate from petrochemical feed stocks. A sustained increase in crude oil prices typically raises manufacturing costs for these products, which can eventually show up on supermarket shelves.
