Dangote Petroleum Refinery has said the petrol, diesel and aviation fuel currently being supplied to the Nigerian market are being produced from crude oil inventories acquired when international crude prices were significantly higher than current market levels, explaining why domestic fuel prices do not immediately mirror declines in global oil prices.
In a statement on petroleum product pricing, the refinery said crude oil is typically procured weeks, and in some cases months, before it is processed under commercial contracts linked primarily to monthly average pricing mechanisms rather than prevailing spot prices.
According to the company, this means the refined products now being sold were produced from crude inventories purchased at substantially higher costs than today's international oil prices.
The refinery disclosed that the average landed cost of crude processed in May stood at $124.80 per barrel, while the average landed cost for June declined to $95.25 per barrel. Both figures remain well above the current international benchmark crude price of about $71.01 per barrel, it said.
Data released by the refinery showed it received 24 crude cargoes totalling about 21.47 million barrels in May at a combined landed cost of approximately $2.68 billion. In June, it took delivery of 20 crude cargoes totalling about 18.93 million barrels, with a combined landed cost of roughly $1.80 billion, reflecting a decline in procurement costs as international prices eased.
The refinery noted that the reduction in average crude acquisition costs between May and June has not translated immediately into equivalent reductions in fuel prices because existing inventories purchased at higher prices are still being processed.
It also clarified that its crude procurement costs extend beyond the benchmark Brent crude price widely reported in international markets.
According to the statement, crude purchased by the refinery is priced on a Dated Brent basis, with additional market premiums, freight and logistics costs, resulting in actual landed costs that differ materially from headline international crude quotations.
Dangote Refinery further stated that despite the elevated cost of feedstock over recent months, it did not fully transfer the impact of higher crude prices to consumers. Instead, it absorbed a significant portion of the increased costs to support market stability, moderate inflationary pressures and cushion Nigerians from volatility in global energy markets.
The company added that this pricing approach has helped keep petroleum product prices in Nigeria below those in neighbouring countries, even after accounting for applicable taxes.
The refinery said the gradual decline in crude procurement costs has now enabled it to begin reducing product prices as lower-cost cargoes progressively enter its production cycle.
It disclosed that since May 30, 2026, it has reduced the ex-depot price of Premium Motor Spirit (PMS) by ₦200 per litre, Automotive Gas Oil (AGO) by ₦300 per litre, and Jet A1 aviation fuel by ₦520 per litre, despite continuing to refine crude acquired when prices were considerably higher.
According to the company, the latest ₦50 per litre reduction in petrol prices represents its fourth price cut within one month, bringing cumulative reductions in PMS prices to more than ₦200 per litre.
Dangote Refinery maintained that its pricing decisions are based on actual production economics and inventory replacement costs rather than short-term movements in international crude prices.
The company added that its current production capacity is sufficient to meet Nigeria's domestic fuel demand, reducing dependence on imported petroleum products, strengthening energy security, conserving foreign exchange and improving price stability.
Looking ahead, the refinery said Nigerians could expect further moderation in fuel prices as lower-cost crude inventories progressively replace higher-priced stocks, provided international market conditions remain favourable.