Dangote Refinery has assured it will prioritise a steady, reliable supply of fuel to the Nigerian economy amid global oil market uncertainty from the US-Israel war with Iran.
Africa’s biggest crude refiner is significantly exposed to volatility in oil prices, which have nearly doubled over the past two weeks, CEO David Bird told a press conference in Lagos on Monday, promising that prices will remain stable within a commercially acceptable range.
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Brent, the international price benchmark for Nigerian crude, which traded at $70 a barrel when the war broke out ten days ago, was trading at $119.5 in early trade on Monday, according to Reuters, surging by a quarter from the previous session. That is the peak level since the middle of 2022.
“If you look at freight rates, it costs us about $800,000 a day to bring crude on a tanker from a Nigerian terminal to our refinery,” Mr Bird said.
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“That’s currently $3.5 million. $800,000 to $3.5 million. Incredible escalation in the freight rates.”
Nigeria, which has an evolving refining industry and produces the most crude on the continent, is not immune to global commodity price movements.
In the last week, Dangote Refinery, which sources part of the crude it processes into finished products from the US and Brazil, has upped the gantry price of petrol twice, cumulatively by 28.6 per cent to N994 per litre, citing cost pressures from imports.
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The broad implications of the Middle East crisis for fuel prices could erode gains Nigeria has recorded from disinflation in recent times and may cause its interest rate easing cycle, which began only last month, to be short-lived, with no end to the war yet in view.
Mr Bird noted that developed and developing economies without a local refining capacity are beginning to see panic buying in both crude and refined products and are already enduring acute shortages. Panic buying, he added, is now evident in markets like the UK and Australia.
China, with a vast refining capacity which depends heavily on crude from the Middle East, is currently facing supply uncertainties and has barred exports to prioritise local demand.
The Dangote Refinery chief assured a continuous, uninterrupted supply of petroleum products to the Nigerian market, provided it continues to have access to Nigerian grades with support from the Nigerian Government and NNPC Limited.
“We will prioritise domestic supply and continue to ensure that Nigeria enjoys what it has enjoyed only for the last 18 months, two years, and that is fuel abundance and not fuel scarcity,” he said.
Mr Bird remarked that the 650,000-barrel-per-day refinery now runs at full capacity.
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