Officials said Saturday that Mr. Obasanjo also ordered police to increase security near oil pipelines.
Nigerian authorities say vandals were siphoning oil from the pipeline in the waterside village of Ilado when a spark triggered the blast. They say flames quickly ignited dozens of oil cans nearby.
The Lagos police commissioner, Emmanuel Adebayo, estimates that between 150 and 200 people were killed - their bodies burned beyond recognition. Officials say the victims were given a mass burial late Friday.
Theft of gasoline and crude oil from pipelines is common in Nigeria, where the vast majority of people live in poverty despite the nation's oil wealth.
A Lagos-based journalist, Paul Okolo, tells VOA it is common for people to siphon fuel from burst or tapped pipes.
In one of the worst oil pipeline explosions in the country, more than one thousand people were killed in 1998 in the southern Delta region.
Some information for this report was provided by AFP, AP and Reuters.