Nigeria’s largest refinery recently increased fuel prices by N100 (7.2 cents), as global fuel prices surge.
The refinery revealed that the recent N100 increase in its fuel ex-depot price was a result of increased global crude oil prices and supply disruptions caused by escalating geopolitical tensions in the Middle East.
According to the refinery, the volatility of global oil markets has limited the availability of refined petroleum products.
Additionally, China’s decision to restrict gasoline and diesel exports has exacerbated an already tight global supply chain.
Despite the tough market conditions, the refinery stated that it remains committed to ensuring Nigeria’s energy stability.
“Dangote Petroleum Refinery & Petrochemicals reassures Nigerians of its unwavering commitment to serving as a stabilising force amid recent shocks in the international oil market,” the company said via a statement issued on Thursday.
“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,” it added.
As seen on PremiumTimes, the refinery stated that to mitigate the impact on the domestic market, it absorbed a portion of the increased costs.
“The refinery has absorbed 20% of the cost escalation, for now, to cushion the domestic market,” it said.
It also noted that it will continue to prioritize local supplies to protect the country from external supply disruptions.
The refinery also shared information on its crude supply structure.
To function at full capacity, the Dangote Refinery requires around 13 shipments per month.
To close the supply deficit, the refinery stated that it must get additional crude from overseas dealers, which means acquiring foreign currencies at current open market rates.
“It is worth noting that Nigerian crude oil is more expensive than the Brent benchmark price by $3 to $6 per barrel,” the refinery stated.
“While we receive about five cargoes a month from NNPC, which we pay for in Naira, these cargoes are priced at international market prices + Premium and fall short of the 13 cargoes which we require to support sales into Nigeria,” it added.
Oil disruptions from the Strait of Hormuz
Benchmark Brent crude oil has suffered strong swings following interruptions caused by the closing of the Strait of Hormuz, a vital global shipping corridor that transports nearly half of the world’s crude oil and condensates.
With wars affecting Gulf shipping lines, the movement of petroleum products by water and land has been hampered, reducing supplies in international markets.
Earlier this week, Nigerians were informed that the retail price of Premium Motor Spirit would rise again, with the actual cost varying by region.
According to market reports, oil prices rose to over $82 per barrel on Sunday before falling to about $78 per barrel on Monday, reflecting the volatility caused by the intensifying violence.
Some analysts predict that if disruptions persist or worsen, oil prices will approach or exceed $100 per barrel.
