Against this backdrop, the managing director and CEO of Dangote Petroleum Refinery, David Bird, says countries that rely heavily on imported fuel are likely to face the biggest strain.
Speaking during a media briefing, Bird said freight costs for fuel shipments have surged dramatically amid the current market disruption, with tanker costs rising from about $800,000 per cargo to roughly $3.5 million per shipment.
The refinery’s comments come as petrol prices in Nigeria continue to surge amid global oil market volatility.
Bird noted that such conditions typically hit import-dependent countries hardest, as they must absorb rising crude prices, higher shipping costs and increasing insurance premiums associated with geopolitical tensions.
Nigeria, however, may be somewhat insulated due to the presence of domestic refining capacity.
Domestic refining offers supply security
According to Bird, the Dangote refinery is positioned to continue meeting Nigeria’s fuel demand despite global supply disruptions.
Domestic refining capacity provides supply security by reducing dependence on imported fuel shipments that can be delayed or become prohibitively expensive during international crises. This helps the country avoid the fuel shortages and long queues that have historically followed global market shocks.
Even under the government’s crude-for-naira arrangement, crude oil supplied to the refinery is purchased at international benchmark prices, meaning the plant operates under the same pricing pressures as refiners elsewhere in the world.
Bird added that the refinery is currently operating at its full nameplate capacity of about 650,000 barrels per day and has the potential to scale output to around 700,000 barrels per day.
As geopolitical tensions continue to roil global energy markets, the situation underscores the strategic importance of domestic refining capacity in shielding economies from external fuel supply shocks.