The Federal Government, acting through the Nigerian National Petroleum Company Limited (NNPC Ltd.), has begun exploring new measures to secure a steady supply of crude oil for the Dangote Petroleum Refinery by turning to third-party international crude traders. The move, according to industry insiders familiar with the discussions, is aimed at ensuring that the massive refinery continues to operate without disruptions as Nigeria tries to stabilise domestic refining capacity.
Officials within the petroleum sector say the arrangement is part of broader efforts by the government to safeguard the country’s energy security and reduce the risk of supply gaps that could affect petrol availability across the country. However, authorities also cautioned that while the intervention may help ensure the refinery has access to crude oil, it may not immediately translate into relief at the pump for Nigerian consumers who are already facing rising fuel costs.
The development comes at a time when many Nigerians are grappling with high petrol prices following recent adjustments announced by the $20bn Lekki-based refinery. Over the past week, the cost of Premium Motor Spirit (PMS), commonly known as petrol, has climbed sharply, adding further strain to households and businesses.
Industry operators told our correspondent that concerns deepened after reports emerged that the refinery had temporarily halted the loading of petrol for distribution, a development that quickly triggered speculation across the downstream sector that another round of price increases could be on the horizon. Oil marketers and depot operators say such disruptions tend to create anxiety within the market, particularly when supply tightens and demand remains high.
Market data and pricing patterns suggest that petrol prices have already experienced multiple upward adjustments in recent days. Dealers confirmed that the refinery’s gantry price for petrol rose from about N774 per litre to roughly N995 per litre within a short period, representing a steep increase that has rippled across the retail market. In several parts of the country, filling stations are now selling petrol at prices exceeding N1,000 per litre, while some outlets have pushed pump prices as high as N1,200 per litre.
The development has intensified economic pressures on millions of Nigerians who depend heavily on petrol for transportation, electricity generation and daily commercial activities. Analysts warn that the situation could further drive up the cost of transportation and essential goods if the trend continues.
Recent market analytics also reveal a shifting pattern in Nigeria’s crude sourcing strategy. Data compiled by the global energy analytics firm Kpler indicate that Nigeria’s crude oil imports from the United States surged dramatically in 2025.
According to the figures, the country imported about 41.13 million barrels of crude from the US last year, representing a 161 per cent increase compared with the 15.79 million barrels recorded in 2024. Energy economists say the increase highlights the growing need for external crude supply as domestic refineries ramp up operations and compete for feedstock in an increasingly volatile global oil market.
Meanwhile, motorists, transport operators and industry observers are closely watching developments in the downstream sector as they prepare for the possible knock-on effects of rising fuel prices. Transport unions have warned that higher petrol prices will inevitably translate into higher fares, while traders fear the cost of moving goods across the country will also climb.
The temporary suspension of petrol loading at the refinery—reportedly the second time such an incident has occurred within a week—has further underscored the logistical and supply challenges facing the sector. Energy analysts say stabilising the market will depend largely on ensuring consistent and reliable crude supply to domestic refineries, particularly large-scale facilities like the Dangote refinery.
Global geopolitical developments are also playing a significant role in shaping the situation. Tensions in the Middle East, especially the growing confrontation between Iran and the United States, have rattled international energy markets and contributed to a surge in global crude oil prices. The crisis has heightened uncertainty around the Strait of Hormuz, a strategic maritime route through which a large portion of the world’s oil supply is transported.
Energy traders say fears of potential disruption along this corridor have pushed Brent crude prices above $92 per barrel, raising the cost of crude for refineries around the world. For refineries that depend on imported feedstock or must compete on the international market for supply, the price surge has made operations more expensive.
Several industry sources and officials within both NNPC Ltd. and the Dangote refinery confirmed that the national oil company has begun leveraging its international trading network to secure additional crude oil supply from third-party traders.
The strategy, they explained, is intended to bridge temporary supply gaps and ensure that the refinery has sufficient crude to maintain production. A senior official at NNPC Ltd., who requested anonymity because he was not authorised to speak publicly on the matter, said the company was already exploring options in the international market.
“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,” the official explained. He added that the move reflects the company’s broader responsibility to protect the country’s energy stability.
“As the national oil company entrusted with safeguarding Nigeria’s energy security, NNPC Limited remains fully committed to supporting domestic refining operations, including the Dangote Petroleum Refinery. Within the framework of our existing agreements, we will continue to facilitate crude supply to the refinery even in the face of temporary availability constraints.”
Sources within the refinery, however, cautioned that importing crude from international markets is unlikely to bring immediate relief to consumers. According to a senior refinery source, global energy dynamics currently make refining operations more expensive across the board. “The ongoing crisis in the Middle East is affecting overall global energy prices, including crude oil, liquefied natural gas and other fuels,” the source said. “Those developments inevitably influence the cost of refined petroleum products everywhere in the world, including here in Nigeria.”
The refinery also pointed to structural constraints affecting its supply of locally sourced crude oil. According to insiders, the facility currently receives only about five cargoes of crude oil each month from NNPC Ltd., far below the volume required for full-scale operations. Under the naira-for-crude policy framework, the refinery ideally needs about 13 cargoes per month to sustain production levels that would allow it to meet domestic demand consistently.
“Furthermore, while we receive about five cargoes a month from NNPC, which we pay for in naira, those cargoes are priced at international market rates plus a premium,” a refinery representative explained. “They also fall significantly short of the 13 cargoes we require each month to fully support sales into the Nigerian market. As a result, we have had to rely increasingly on imported crude purchased at global market prices.”
Industry Stakeholders React
Industry stakeholders within Nigeria’s petroleum sector have continued to weigh in on the evolving fuel supply situation, noting that increased domestic refining capacity could play a critical role in moderating petrol prices over time. Analysts and operators across the downstream sector say that if local refineries receive adequate crude supply and operate at optimal capacity, Nigeria may gradually reduce its dependence on imported refined petroleum products and cushion the domestic market from the volatility of global oil prices.
Among those who spoke on the issue is Eche Idoko, the National Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria, who said the success of the government’s naira-for-crude policy will largely determine how soon Nigerians begin to experience stability in petrol pricing. According to him, the policy was conceived as a strategic intervention to support domestic refining by ensuring that local refineries receive crude oil in exchange for payments made in naira rather than dollars.
Idoko explained that while the policy holds considerable promise for strengthening the domestic refining ecosystem, its impact will depend on whether it is fully implemented and sustained by consistent crude allocation from the government. “The Dangote refinery requires about fourteen cargoes of crude oil from the government every month under the naira-for-crude arrangement for the refinery to fully meet its operational demand,” he said. “If that supply commitment is honoured consistently, it will certainly have a positive effect on petrol pricing within the country because the refinery will be able to refine at scale and reduce reliance on imported crude.”
However, he cautioned that the benefits may remain limited if the refinery continues to rely heavily on foreign crude purchased at international market rates. “As long as the refinery sources a large portion of its feedstock from the United States and other international suppliers, the cost of transporting that crude especially through sensitive global shipping routes will inevitably be transferred to Nigerian consumers,” he added.
Idoko further pointed to the challenges posed by global maritime energy routes, particularly the Strait of Hormuz, which serves as one of the most important corridors for international oil shipments. According to him, geopolitical tensions or disruptions around the route can significantly increase shipping costs and insurance premiums for oil cargoes moving through the region.
“Whenever there are tensions or disruptions in strategic routes like the Strait of Hormuz, it immediately affects freight charges and insurance costs on crude shipments,” he said. “Those additional costs eventually become part of the refining cost structure, and by the time the refined petrol reaches the market, consumers are the ones who bear the burden.”
The industry spokesman also urged the Federal Government to broaden the scope of the naira-for-crude policy to include other domestic refineries across the country. He argued that expanding the policy would encourage competition within the downstream petroleum sector and create a more resilient refining ecosystem capable of stabilising prices.
“If the policy is extended beyond the Dangote refinery to other refineries operating in Nigeria, we will begin to see healthy competition within the market,” Idoko said. “Competition among several functioning refineries will naturally encourage efficiency and reduce the pressure that currently exists on a single major supplier.”
He also highlighted structural factors influencing the cost of operations at the Dangote Petroleum Refinery, particularly its location within a designated free trade zone. According to Idoko, this status has certain regulatory implications that may inadvertently increase operational costs. “Because the refinery is located within a free trade zone, the crude supply arrangement is sometimes treated almost as though it were coming from an external company,” he explained.
“In practical terms, this means some of the charges that normally apply to imports still come into play.” He stressed that such costs can significantly affect pricing outcomes in the downstream market. “When you add an extra five to seven dollars per barrel in charges, that becomes a substantial cost in the refining process,” he said. “Ideally, those additional charges should be reviewed or removed entirely if the goal is to reduce the overall price Nigerians pay for petrol.”
Energy market analysts have also pointed to regulatory decisions affecting petrol import licences as another factor shaping competition in the downstream sector. Jeremiah Olatide, Chief Executive Officer of the energy intelligence platform Petroleumprice.ng, said the number of marketers allowed to import Premium Motor Spirit this year has been sharply limited.
According to him, this has effectively strengthened the influence of the Dangote refinery within the market. “Importers have not really been granted many licences to bring petrol into the country,” Olatide said. “From the data we have reviewed, close to ninety per cent of marketers who applied for permits to import PMS were not granted approvals. The intention behind this policy appears to be to encourage and support local refining capacity, particularly the Dangote refinery.”
While acknowledging the strategic importance of supporting domestic refining, Olatide emphasised the need for a balanced approach that allows a controlled level of imports to complement local production. In his view, maintaining such a balance is essential for strengthening Nigeria’s energy security while also stabilising prices for consumers.
“There has to be a carefully managed equilibrium between locally refined petrol and imported supply,” he said. “Ideally, imports should account for no more than twenty to twenty-five per cent of the country’s total petrol supply, while the remaining seventy-five to eighty per cent should be refined domestically. That kind of structure will strengthen the economy, encourage investment in local refining, and at the same time ensure that the market remains competitive.”
Despite the current supply pressures and global market uncertainties, Olatide maintained that the presence of the Dangote refinery has already helped cushion Nigeria from potentially more severe fuel price shocks. According to him, global energy markets are currently facing multiple disruptions caused by geopolitical tensions, fluctuating crude prices and supply chain challenges.
In such circumstances, Nigeria’s heavy dependence on imported fuel in the past would have placed the country in a far more vulnerable position. “The truth is that there are crises across the global energy market at the moment,” he said. “Thankfully, Nigeria now has the Dangote refinery operating locally. If the refinery was not functioning today, petrol prices in Nigeria could easily have climbed to about one thousand five hundred naira per litre or even higher.”
He added that while the refinery alone cannot completely insulate Nigeria from international market fluctuations, its existence has significantly moderated the impact of global shocks on domestic fuel prices. “The refinery has not eliminated the problem entirely,” Olatide noted, “but it has certainly reduced the scale of the crisis Nigerians might have faced if the country was still relying solely on imported petrol.”
Imports from US
Recent energy market data have revealed a significant shift in Nigeria’s crude sourcing pattern, highlighting a growing dependence on imported crude oil to sustain the country’s expanding refining operations. According to analytics compiled by the global commodity intelligence firm Kpler, crude exports from the United States to Nigeria rose sharply in 2025.
The data show that Nigeria imported approximately 41.13 million barrels of American crude during the year, representing a dramatic increase of about 161 per cent when compared with the 15.79 million barrels recorded in 2024. Analysts say the surge reflects the evolving realities of Nigeria’s energy sector, where newly operational refineries and increasing refining capacity are creating a greater demand for crude oil feedstock than domestic allocations have so far been able to meet.
The rise in imports from the United States has coincided with the growing operational scale of the Dangote Petroleum Refinery, which has steadily increased its refining activities since ramping up production. Industry data indicate that in July 2025 alone, the refinery imported crude oil at an estimated rate of about 590,000 barrels per day. Of that volume, roughly 60 per cent consisted of light sweet crude sourced from the United States, while the remaining 40 per cent came from Nigerian crude grades.
Energy market observers note that this marked a notable milestone in the refinery’s supply chain, as it represented the first time that imported American crude surpassed locally sourced Nigerian crude in the refinery’s feedstock mix.
While industry analysts acknowledge that the use of foreign crude can sometimes improve refining efficiency particularly when certain grades are more compatible with sophisticated refinery configurations they also point out the striking contradiction within the development. Nigeria remains Africa’s largest crude oil producer and one of the most resource-rich oil nations in the world, yet its flagship refinery has increasingly turned to foreign crude to sustain production.
According to energy experts, this paradox highlights the structural complexities within the country’s petroleum supply chain, where crude production, allocation policies and refinery demand do not always align seamlessly.
Part of the challenge lies in the limited volume of crude that is allocated directly to domestic refineries. Officials from the Nigerian Upstream Petroleum Regulatory Commission confirmed that between January and August 2025, local refineries collectively requested approximately 123.48 million barrels of crude oil in order to sustain their operations.
However, only 67.66 million barrels were ultimately supplied during that period. The significant shortfall underscores the continuing struggle to match the rising demand for crude oil from domestic refineries with the actual volume made available by upstream producers. Analysts say the gap has forced refiners to increasingly look toward international markets to secure the crude they need to keep production lines running.
Despite these operational constraints, the Dangote refinery has continued to navigate the challenges of operating within Nigeria’s newly deregulated petroleum market. Industry sources say the refinery often absorbs part of the rising operational and procurement costs in order to reduce the immediate impact on consumers and maintain a steady supply of petrol to the domestic market.
However, refinery officials stress that such measures have clear financial limits. One official familiar with the refinery’s operations explained that long-term sustainability requires balancing affordability with economic viability. “Selling refined petroleum products below production cost would undermine our ability to continue operating effectively,” the official said. “If we consistently sell below cost, it becomes extremely difficult to procure crude oil, maintain stable production levels and guarantee uninterrupted fuel supply to the Nigerian market.”
The broader petroleum market has also been affected by a combination of external and domestic pressures that have contributed to the steady rise in fuel prices. Energy analysts say geopolitical tensions in global oil-producing regions, combined with domestic supply constraints and evolving regulatory frameworks, have created a complex environment for pricing within Nigeria’s downstream sector.
As a result, petrol prices have continued to climb in many parts of the country. In major urban centres such as Lagos and Abuja, pump prices for petrol now range between about N1,030 and N1,100 per litre in several retail outlets, reflecting the mounting pressures facing the market.
The impact of these rising fuel costs is already being felt across the wider economy. Commercial transport operators in many cities have begun adjusting their fares to reflect the higher cost of fuel, while businesses that depend heavily on transportation and logistics are preparing for possible increases in operating expenses. Economists warn that sustained increases in petrol prices could eventually translate into higher costs for food, goods and other essential services, placing additional strain on households.
Market observers say the current situation has been shaped by the convergence of three major developments in recent weeks. The first is the possibility of a third petrol price adjustment within a short time frame, following earlier increases that had already pushed pump prices beyond the N1,000-per-litre threshold in several states. The second development is the temporary suspension of fuel loading by the Dangote refinery, which created uncertainty among marketers and triggered speculation about potential supply disruptions.
The third factor is the sharp rise in crude imports from the United States, which has effectively tripled within a year. Together, these developments highlight the delicate balance between domestic refining capacity, international crude supply dynamics and government policy decisions that continue to shape Nigeria’s energy landscape.
Amid these challenges, the Dangote refinery has also taken steps to strengthen its distribution network in order to ensure that refined petroleum products continue to reach the domestic market. Industry sources disclosed that the refinery has approved an expanded list of petroleum marketers and distribution partners authorised to lift Premium Motor Spirit from its facilities.
The move increases the number of approved companies from about 13 to more than 30 across the country, significantly widening the pool of marketers involved in distributing fuel from the refinery.
Among the companies included in the expanded network are NIPCO Plc, MRS Oil Nigeria Plc, TotalEnergies Marketing Nigeria Plc and Conoil Plc, along with several other petroleum marketing firms operating nationwide. Industry observers say the decision is aimed at improving the efficiency of fuel distribution across the country, ensuring that petrol continues to reach filling stations despite the challenging supply and pricing conditions currently affecting the petroleum market.
By broadening its network of marketing partners, the refinery hopes to minimise bottlenecks, improve access to fuel and maintain stability in Nigeria’s downstream sector at a time when the industry is navigating multiple pressures.