The Federal Government has called for a West African petroleum pricing benchmark that reflects the region’s own supply, demand and market conditions, arguing that disruptions in Western Europe and the Mediterranean should not automatically translate into higher fuel prices in African markets.
The Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Rabiu Umar, made the case on Tuesday at the second West Africa Refined Fuel Market Conference in Abuja, where regulators, refiners, traders, financiers and other industry stakeholders discussed the creation of a transparent regional market for refined petroleum products.
Umar, who also chairs the West Africa Regulators Forum (WARF), said West Africa’s growing refining capacity and changing petroleum trade flows made reliance on external price references increasingly difficult to justify.
“If there is a problem in Western Europe or in the Mediterranean, it should not automatically affect our pricing in Africa when the issue has absolutely nothing to do with what is happening here,” Umar said.
He argued that petroleum prices should instead respond to the factors affecting the region, including geopolitical developments, supply and demand and other market fundamentals.
The call comes amid renewed volatility in global energy markets following the disruption around the Strait of Hormuz, one of the world's most important oil shipping routes. Brent crude rose above $90 per barrel at points in recent days before easing as markets assessed diplomatic efforts involving Iran and Oman.
Umar said a regional benchmark would give West African markets greater capacity to distinguish between external disruptions and developments affecting their own petroleum supply chains.
“If we have a problem, it is reflected in the pricing. If we don’t have a problem, then we are shielded to an extent from what is going on in other locations,” he said.
The conference was jointly hosted by NMDPRA, S&P Global Commodity Insights and WARF under the theme, “Funding West Africa Infrastructure & Distribution to Create a Transparent Market for Regional Price Benchmarks.”
The initiative is designed to move the region from discussions about price discovery towards establishing the infrastructure, liquidity and regulatory conditions required for a functioning petroleum trading hub.
Umar cautioned, however, that establishing a benchmark would require more than simply producing a reference price.
“A reference price is not by itself a trading hub. A conference is not a market,” he said, identifying physical infrastructure, commercial liquidity, reliable market information, regulatory cooperation and operational efficiency as essential foundations.
He said Africa already had three critical ingredients for a stronger petroleum market, resources, demand and expanding refining capacity, but needed to build systems capable of connecting them efficiently.
The NMDPRA chief executive called for investment in storage, ports, roads, railways and pipelines, alongside stronger distribution networks and access to regional and international capital.
He also urged West African countries to adopt a regional approach to infrastructure development rather than independently building similar facilities.
Umar cited Nigeria’s substantial petroleum storage capacity as an example, arguing that the country already has more tank capacity relative to consumption than it needs and could potentially serve regional markets instead of neighbouring countries duplicating infrastructure.
He said each country should focus on its comparative advantages so that infrastructure across the region becomes complementary rather than repetitive.
The development of a single regional market also requires greater compatibility in petroleum product specifications, Umar said.
He identified differences in fuel quality and technical standards among West African countries as a barrier to cross-border trade, noting that products cannot move seamlessly between markets when national specifications differ substantially.
According to him, Nigeria, Ghana and neighbouring countries need greater compatibility in their product standards to facilitate regional petroleum trading.
Umar also stressed the importance of reliable market information to the credibility of any benchmark.
He said price discovery would be difficult in a market where information on supply, demand, inventories, infrastructure, product availability and commercial transactions is incomplete or unreliable.
“A credible benchmark cannot emerge from an opaque market,” he said, adding that reliable reporting would enable businesses and regulators to make better commercial and policy decisions.
He said the West Africa Regulators Forum would play a central role in creating the regulatory conditions necessary for cross-border petroleum trade.
Umar said regional integration did not require every country to adopt identical laws. Instead, regulators should establish sufficient compatibility to allow petroleum products to move safely, transparently and efficiently across national borders.
He described this as regulatory integration rather than regulatory uniformity.
The proposed regional market would also require stronger participation from the financial and commercial sectors.
Umar said capital would move towards projects where risks are understood, regulations are predictable and returns can be sustained.
He said governments and regulators therefore had a responsibility to create conditions that provide investors with confidence while maintaining safety, market integrity, competition and regulatory compliance.
He identified five priorities for the regional roadmap beyond 2026: improving physical market mobility, financing strategic infrastructure, optimising product standards and regulations, strengthening market data and transparency, and developing a complete petroleum trading ecosystem.
Such an ecosystem, he said, would bring together refiners, traders, terminal operators, ship owners, marketers, banks, insurers, commodity exchanges, data providers and regulators.
Umar said the eventual objective was for market activity itself to generate a credible regional benchmark rather than having prices imposed externally.
The initiative would mark a shift for West Africa from largely consuming petroleum products priced through external markets to becoming a more influential centre of petroleum price discovery, trading and investment.
Umar said the region had developed the roadmap in 2025 and should focus in 2026 on financing and executing the required projects.
The intended outcome, he said, is a West African petroleum market where products move more efficiently, supply security improves, investors have greater certainty, regional trade expands and prices increasingly reflect the fundamentals of the region rather than disruptions occurring elsewhere.