The Federal Government, through the Nigerian National Petroleum Company Limited, has begun moves to secure crude oil supply for the Dangote Petroleum Refinery through third-party international traders, in a bid to sustain domestic refining operations.
Officials, however, warned that the intervention may not immediately translate into lower petrol prices for consumers. Nigerians currently grapple with high fuel prices, following the recent hikes in the cost of the commodities by the $20bn Lekki-based refinery.
Oil dealers and industry players confirmed to one of our correspondents that the refinery temporarily suspended the loading of Premium Motor Spirit, petrol, a development that heightened speculation that another fuel price increase could be imminent.
This would mean the third surge in petrol prices within a week, following adjustments that pushed gantry prices from N774 to N995 per litre. As a result, retail pump prices in several states now exceed N1,000 per litre, as some stations now dispense petrol at about N1,200/litre, intensifying economic pressures on Nigerians.
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This comes as recent market data illustrates the shift in crude sourcing patterns. Kpler analytics show that crude imports by Nigeria from the United States surged to 41.13 million barrels in 2025, up 161 per cent from 15.79 million barrels in 2024.
Amid the fuel price hike in Nigeria, motorists and industry observers are bracing for the impact on transport fares and the cost of goods. The refinery’s temporary halt in PMS loading, the second within a week, reflects logistical challenges in sustaining domestic supply, particularly given global crude market volatility. Analysts note that stabilising prices depends heavily on reliable crude allocation to domestic refineries.
One critical factor is the geopolitical crisis in the Middle East, especially the Iran-US conflict, which has disrupted oil supply chains and pushed Brent crude prices above $92 per barrel. Tensions around the Strait of Hormuz, a vital energy transit corridor, have compounded the global price surge. The disruption has made it costly and difficult for refiners relying solely on local crude.
Multiple industry sources and officials from both NNPC and Dangote refinery confirmed that the national oil company is leveraging its global crude trading network to source third-party supply for the Dangote refinery at competitive international market rates.
“Leveraging our global crude trading network, we are sourcing third-party crude for the refinery at prices that are competitive with prevailing international market rates,” a senior official at NNPC, who spoke in confidence due to the lack of authorisation to speak on the matter, told The PUNCH on Sunday.
The official further explained, “As the national oil company entrusted with safeguarding Nigeria’s energy security, NNPC Limited remains fully committed to supporting domestic refining, including the Dangote Petroleum Refinery. Within the framework of our existing agreements, we continue to facilitate crude supply to DRP, in the face of temporary availability constraints.”
The Dangote refinery has, however, cautioned that sourcing crude internationally may not immediately reduce pump prices. A refinery source explained: “The current Middle East crisis is affecting overall global energy prices, crude oil, LNG and other fuels, and that has implications for refined product pricing globally.”
The refinery also highlighted constraints in domestic supply. It receives just five cargoes a month from NNPC, instead of the 13 cargoes required under the naira-for-crude policy, forcing reliance on imported crude purchased at international market rates.
“Furthermore, while we receive about five cargoes a month from NNPC, which we pay for in naira, these cargoes are priced at international market prices plus premium and fall short of the 13 cargoes which we require to support sales into Nigeria,” the refinery stated.
Industry players speak
Industry stakeholders note that increased domestic refining output could help moderate petrol prices. Eche Idoko, National Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria, said the naira-for-crude policy could influence pricing if fully implemented, but warned that imported crude costs and global tensions remain a limiting factor.
“Dangote needs 14 cargoes of crude from the government under the naira-for-crude policy, for the refinery to meet its demands. If this is done, it will impact price locally, but as long as the refinery sources the majority of its feedstock from the United States and must bypass the Strait of Hormuz, they will transfer the cost to Nigerian customers,” he said.
Idoko urged expansion of the policy to other domestic refineries to promote competition and further stabilise prices. He added that operational costs linked to Dangote’s location in a free trade zone also affect pricing:
“This type of supply is treated as if it were coming from an external company because the refinery is located in a free trade zone, meaning many of the charges that apply to imports are still applicable. The additional cost of about $5 to $7 per barrel is substantial and should ideally be removed to help reduce the overall price consumers pay.”
Energy analysts also highlight the impact of limited import licences on market competition. Jeremiah Olatide, CEO of Petroleumprice.ng, said nearly 90 per cent of marketers seeking petrol import permits this year have been denied, giving the Dangote refinery dominant market influence.
“Importers haven’t really been given import licences. About 90 per cent of those who applied for PMS import permits were not issued approvals, largely to promote and encourage local refineries, particularly the Dangote refinery,” he noted.
Olatide stressed that a balance between local refining and controlled imports would strengthen energy security and stabilise prices. “Imports should not exceed about 20 to 25 per cent of total supply, while the rest is refined locally. That balance would strengthen the economy and improve energy security.”
Despite supply pressures, the presence of the Dangote refinery has cushioned Nigeria from more severe price spikes. “There are crises everywhere in the global energy market, and thankfully, we now have the Dangote refinery. If the refinery was not operating, petrol prices in Nigeria could easily have reached N1,500 per litre,” Olatide added.
Imports from US
Recent market data illustrates the shift in crude sourcing patterns. Kpler analytics show that US crude exports to Nigeria surged to 41.13 million barrels in 2025, up 161 per cent from 15.79 million barrels in 2024. This reflects Nigeria’s growing dependence on imported crude to meet refinery feedstock needs.
The surge in crude imports from the US coincides with Dangote’s increasing reliance on foreign crude. In July 2025, the refinery imported 590,000 barrels per day, with 60 per cent coming from US light sweet crude and 40 per cent from Nigerian grades, marking the first time US supply overtook domestic crude for Dangote.
Analysts note that while this enhances compatibility with complex refining processes, it underscores the paradox of Africa’s largest oil producer relying on foreign crude despite rising local output.
Domestic crude allocations also remain insufficient. The Nigerian Upstream Petroleum Regulatory Commission confirmed that between January and August 2025, local refiners received 67.66 million barrels, falling far short of the 123.48 million barrels requested. The shortfall reflects ongoing challenges in bridging the gap between rising production levels and refinery demand.
Meanwhile, the Dangote refinery has continued to manage operational realities in a deregulated environment. It absorbs part of the cost escalation to cushion consumers while ensuring an uninterrupted supply. “Selling below cost would undermine our ability to procure crude, sustain production, and guarantee supply,” a refinery official said.
The combined pressures of geopolitical tensions, local supply gaps, and market regulation have created a perfect storm for rising fuel prices. With petrol now retailing between N1,030 and N1,100 per litre in major cities, commercial drivers have already adjusted fares, and consumers are bracing for higher costs across the economy.
The rising fuel prices come as three key developments compound market pressure: the looming third petrol price hike, Dangote’s temporary suspension of fuel sales, and Nigeria’s tripling of US crude imports in one year. These factors illustrate the interplay between domestic refining capacity, international supply constraints, and government policies, shaping the country’s energy market in real time.
Meanwhile, it was gathered that the Dangote refinery has approved a new list of petroleum marketers and distribution partners to ensure continued lifting of PMS, expanding the pool from 13 to over 30 companies nationwide
This includes NIPCO Plc, MRS Oil Nigeria Plc, TotalEnergies Marketing Nigeria Plc, Conoil Plc, and others, highlighting efforts to broaden access while navigating challenging supply and pricing conditions.
PUNCH
