Rising volatility in the global oil market and soaring shipping costs have pushed petrol prices above ₦1,000 per litre in Nigeria, even as major economies consider releasing emergency oil reserves to calm international markets.
The development comes as the Managing Director and Chief Executive Officer of Dangote Petroleum Refinery, David Bird, explained that domestic fuel prices remain heavily influenced by global market forces despite the refinery operating at full capacity.
Speaking during a media briefing on Monday, Bird said the refinery was fully exposed to international commodity markets, stressing that this reality needed to be clearly understood in discussions about fuel pricing in Nigeria.
According to him, the refinery purchases Nigerian crude at international benchmark-linked prices, even under the federal government’s crude-for-naira arrangement.
“We are fully exposed to the international commodity market. That needs to be widely understood. We purchase, even under the crude-for-naira programme, Nigerian crude from the Nigerian government at international benchmark-related prices,” he said.
Bird added that beyond the cost of crude, the refinery also pays international freight and insurance charges to transport the commodity from export terminals to the refinery.
He disclosed that Nigerian crude accounts for about 30 to 35 per cent of the refinery’s crude intake, while the remaining volumes are sourced from the international market and paid for in US dollars.
According to him, many of these cargoes pass through multiple international traders before reaching the refinery, adding further costs and premiums to the supply chain.
“All that does is add further costs and premium to purchasing those Nigerian barrels and processing them through Dangote Refinery,” he said.
Bird also highlighted the scale of recent volatility in global oil markets, noting that Brent crude had surged from the mid-$60 range barely a week earlier to about $118 per barrel.
At the same time, he said tanker freight rates had jumped sharply from around $800,000 to approximately $3.5 million per shipment.
He acknowledged the pressure such price increases place on Nigerian consumers but said the refinery was working to minimise costs within its supply chain.
“I fully acknowledge the pain that is being suffered. We are seeing that. We are doing what we can to ensure that we minimise costs throughout our supply chain,” he said.
The Dangote Group, in key highlights of the media session posted on its official X account, noted that the refinery’s exposure to global commodity markets extends beyond crude prices to freight rates, insurance and financing costs.
It added that while domestic refining had strengthened Nigeria’s energy security by preventing fuel shortages and queues during periods of global disruption, the refinery still purchases crude at international benchmark prices rather than at a discount.
Bird said the refinery is currently operating at its full nameplate capacity of about 650,000 barrels per day, with the potential to scale up to roughly 700,000 barrels daily.
Despite the production scale, petrol prices have continued to climb sharply in recent days.
Earlier on Monday, the refinery increased the gantry price of Premium Motor Spirit (PMS) to ₦1,175 per litre from ₦995 per litre announced on Friday, representing an increase of ₦180, or about 18.1 per cent, within three days.
The adjustment marked the third upward revision within a week, with gantry prices having risen from about ₦774 per litre the previous week.
Retail pump prices in several states have already exceeded ₦1,000 per litre, with some filling stations selling petrol at around ₦1,200 per litre.
The surge in domestic fuel prices coincides with mounting tensions in global energy markets linked to the war in the Middle East, which has tightened supply and pushed crude prices above $100 per barrel.
Amid the price rally, finance ministers of the Group of Seven (G7) advanced economies are scheduled to hold an emergency meeting to consider releasing oil from strategic reserves in an attempt to stabilise the market.
According to international media reports, including the Financial Times and the Australian Financial Review, the meeting will involve officials from the G7 as well as the head of the International Energy Agency (IEA).
The discussions are expected to focus on the potential release of between 300 million and 400 million barrels of oil from global stockpiles.
The proposed volumes are significantly higher than the 240 million barrels released by the IEA in 2022 after oil prices spiked following Russia’s invasion of Ukraine.
Reports indicate that at least three IEA member countries, including the United States, have expressed interest in participating in the coordinated release.
News of the possible intervention briefly triggered a sell-off in the oil market, with Brent crude and West Texas Intermediate (WTI) retreating from recent highs, although both benchmarks remain above $100 per barrel.
Energy analysts, however, say that even if the G7 and IEA eventually agree to release up to 400 million barrels of oil, the move may only have a limited effect on prices unless global supply conditions improve significantly.