Nigeria’s fuel market may be entering another delicate phase as rising global crude oil prices begin to ripple through the downstream sector. Against this backdrop, Dangote Refinery has moved to adjust its petrol pricing, explaining that the decision reflects mounting pressure from the international oil market and the rising cost of crude supply.
In a statement issued by its management, the refinery reassured Nigerians that it remains committed to supporting the country’s energy stability despite the growing turbulence in global petroleum markets. According to the company, recent developments across major oil-producing regions have disrupted refining operations worldwide, tightening supply of petroleum products and pushing production costs higher.
Global Oil Shock Pushes Refining Costs Higher
Management pointed to the ongoing conflict in the Middle East as a major factor behind the latest disruptions in the global oil market. The crisis has forced some refineries to shut down while cutting refining output in several regions, leading to a tightening supply of refined petroleum products worldwide.
At the same time, China’s decision to restrict exports of gasoline and diesel has further squeezed global availability, adding fresh pressure to the already strained supply chain.
These developments have driven crude oil and freight costs sharply higher. Benchmark Brent crude has surged by about 26 percent within a short period to above $84 per barrel, significantly raising the cost of refining petrol and other petroleum products.
In response to the rising costs, the refinery said it implemented a measured adjustment of ₦100 per litre in its ex-depot price of Premium Motor Spirit (petrol), representing roughly a 12 percent increase.
However, the company noted that it has absorbed about 20 percent of the cost escalation for now in an effort to cushion Nigerian consumers from the full impact of the global price surge.
Crude Oil Now Lands Between $88 and $91 per Barrel
Providing further insight into the cost pressure facing the refinery, management explained that Nigerian crude oil currently sells between $3 and $6 above the Brent benchmark price.
When freight charges of about $3.50 per barrel are added, the crude oil effectively lands in the refinery’s tanks at between $88 and $91 per barrel.
The refinery noted that this represents a significant jump compared to earlier market conditions. For instance, when crude oil landed at roughly $68 per barrel, the refinery’s ex-depot petrol price stood at around ₦774 per litre.
This comparison, the company said, clearly shows how rising global crude prices directly influence the cost of refined petroleum products.
Crude Supply Gap Creates Additional Pressure
The refinery also disclosed that crude supply arrangements remain a major operational challenge. According to management, the facility currently receives about five crude cargoes monthly from the , which are paid for in naira.
However, these cargoes are still priced at international market rates plus premium and fall short of the refinery’s requirements. The facility needs roughly 13 crude cargoes per month to support its domestic sales commitments.
As a result, the refinery said it often has to source additional crude from both local and international traders, forcing it to obtain foreign exchange from the open market to pay for those cargoes.
Despite the challenging environment, the refinery reiterated that domestic refining remains critical to protecting Nigeria from severe supply disruptions in the global petroleum market. By prioritising supply to the local market, the company said it aims to ensure Nigerians continue to have access to petrol and other refined products even as volatility persists in the global oil industry.