Global Oil Shock: Dangote moves to prioritise local market as Middle East crisis deepens

By: Amarachi Okonkwo

Amid escalating tensions in the Middle East that are rippling through global energy markets, Dangote Petroleum Refinery and Petrochemicals has reassured Nigerians that it will prioritise domestic fuel supply to cushion the country from supply shocks and rising global costs.

The refinery said the conflict has already disrupted refinery operations worldwide, tightened fuel supply chains and pushed up crude oil and freight costs, increasing pressure on global petroleum markets.

According to the company, the crisis has forced the shutdown of some refineries while reducing global refining output, tightening the availability of petroleum products in international markets.

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“This is leading to a global scarcity of petroleum products. China has banned the export of gasoline and diesel, but the Dangote Refinery will ensure that Nigeria is insulated from these supply shocks by prioritising supply to the domestic market. This is one of the many benefits of domestic refining,” the refinery said.

The company noted that the intensifying conflict has sharply increased crude oil and maritime freight costs, developments already feeding into global fuel prices.

Benchmark Brent crude prices, it said, have surged by about 26 per cent to above $84 per barrel since the conflict escalated, reflecting growing supply fears across the international energy market.

In response to rising costs, the refinery implemented a N100 per litre adjustment in its ex-depot price of Premium Motor Spirit (PMS), representing an increase of about 12 per cent. However, the company said it absorbed roughly 20 per cent of the total cost escalation to cushion Nigerian consumers from the full impact of the global shock.

The refinery said it continues to source crude at prevailing international market prices whether the supply comes from local producers or foreign sellers, adding that the cost of crude feedstock remains significantly above benchmark levels.

Dangote disclosed that it currently receives only five crude cargoes monthly from the Nigerian National Petroleum Company Limited (NNPCL), far below the 13 cargoes required to sustain full domestic supply.

The shortfall has forced Africa’s largest refinery to turn to international traders for additional crude cargoes at higher prices, even as the geopolitical crisis continues to drive global energy costs upward.

The company said the gap between what NNPC supplies and what the refinery requires highlights structural weaknesses in Nigeria’s crude supply framework at a time of heightened global market volatility.
China, the world’s largest crude importer, has further tightened supply by banning exports of gasoline and diesel. To bridge the gap, the Lekki-based refinery has had to procure additional cargoes from both local and international traders at open-market foreign exchange rates, significantly raising its operating costs.

While crude supplied by NNPC is paid for in naira, it is priced at international market rates with an added premium.

“Nigerian crude oil is currently priced between $3 and $6 above the Brent benchmark. After adding freight costs of about $3.50 per barrel, crude oil lands in our tanks at between $88 and $91 per barrel,” the refinery said.

The company noted that this compares sharply with the $68-per-barrel landing cost when its ex-depot PMS price stood at N774 per litre.

Since then, rising crude and freight costs have forced the refinery to increase prices by N100 per litre, even as it absorbs part of the cost escalation to soften the impact on consumers.

The refinery also said Nigeria’s upstream producers are falling short of crude supply obligations under the Petroleum Industry Act (PIA), the 2021 legislation designed to encourage domestic refining.

According to the company, non-compliance by upstream operators has forced it to source a significant portion of its crude feedstock from international traders who charge additional premiums on already elevated spot-market prices.

Despite these pressures, Dangote said it would continue to prioritise the Nigerian market over exports, positioning domestic refining as a strategic buffer against global energy disruptions.

The refinery said its operations could help stabilise fuel supply and reduce Nigeria’s foreign exchange demand by limiting the need to import refined petroleum products.

Meanwhile, as the Gulf crisis entered its seventh day, Iran assured that Nigerians living in the country remain safe despite the escalating tensions triggered by the ongoing U.S.–Israel–Iran military standoff.

Iran’s Ambassador to Nigeria, Mahdavi Raja, said at a news conference in Abuja that there had been no reports of harm to Nigerian citizens living in cities such as Tehran and Qom since the outbreak of hostilities.

“The safety of foreign residents, including Nigerians, is a priority for the Islamic Republic of Iran. Our defensive actions are targeted strictly at military installations and do not threaten civilians or foreign nationals,” he said.

Raja added that Iran remains committed to maintaining diplomatic relations even as it defends its sovereignty in line with international law.
The assurance comes as geopolitical tensions continue to intensify following the assassination of Iran’s Supreme Leader, Ali Khamenei, in a joint U.S.–Israel strike on his residence in Tehran.

U.S. President Donald Trump has since said Washington must play a role in determining Iran’s next leadership, warning that the United States would reject any successor who continues the policies of the late leader.

The conflict has already claimed more than 1,000 lives in Iran, with Israel reporting 11 deaths from Iranian attacks and the United States confirming six American soldiers killed in the hostilities.