Fuel prices in Nigeria have surged to record highs despite full operations at the Dangote Petroleum Refinery, as global energy disruptions linked to the Middle East conflict continue to strain supply.
Data show that the refinery, which processes 650,000 barrels per day and became fully operational earlier this year, has not insulated Nigeria, Africa’s largest oil producer, from rising fuel costs.
The facility was expected to end Nigeria’s reliance on imported fuel and position the country as a major exporter of refined petroleum products after decades of limited local refining capacity.
However, Nigerians are now grappling with a 65 per cent increase in fuel prices — the highest among major African economies. The spike comes as the refinery struggles to secure sufficient local crude supply and must import expensive cargoes from international markets affected by geopolitical tensions.
The challenge stems partly from Nigeria’s financing arrangements. A large portion of crude produced by the Nigerian National Petroleum Company (NNPC) Limited is committed to oil-backed loans and pre-export agreements.
Analysts estimate that about 400,000 barrels per day of Nigeria’s roughly 1.5 million barrels daily production is tied to debt repayments to international oil companies, banks and traders.
The Managing Director of Dangote Refinery, David Bird, disclosed that only five crude cargoes are sourced locally each month, far below the 13 to 15 needed for full operations. As a result, the refinery imports the remaining supply at higher global prices influenced by the Middle East crisis.
Oil prices head for record monthly rise as Middle East conflict escalates
The situation is further complicated by Nigeria’s lack of a strategic fuel reserve, leaving the country vulnerable to supply disruptions and price shocks.
Global energy markets were shaken following U.S.-Israeli attacks on Iran in late February, which disrupted shipments through the Strait of Hormuz — a key route for roughly one-fifth of global energy supplies. Oil prices have since climbed above $100 per barrel, about 50 per cent higher than pre-conflict levels, Reuters reported.
In Nigeria, the impact has been more pronounced than in other African countries. Between March 2 and March 21, fuel prices rose by 10–17 percent in Ghana, remained stable in Kenya due to price controls, and increased by about 1 percent in South Africa.
The refinery has increased gasoline supply to Nigeria’s domestic market while also meeting growing demand across Africa. It prices fuel based on international benchmarks, including freight and insurance costs.
As a result, wholesale fuel prices rose by about 61 per cent in March, pushing pump prices to around N1,400 per litre in Lagos and Abuja — the highest on record.
Following a meeting with President Bola Tinubu, the president of Dangote Group, Aliko Dangote, warned that prolonged conflict in the Middle East could worsen economic hardship across Africa.
Labour unions and businesses have urged the government to provide emergency relief measures, including tax incentives for refiners, increased naira-based crude supply, and temporary cushioning for consumers.
In response to rising costs, the Oyo State Government approved a N10,000 transportation allowance for public workers for three months starting in April.
Meanwhile, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, stated that the government would not interfere with market-driven fuel pricing, opting instead to focus on measures to help citizens adjust to higher energy costs.
