KEY POINTS

• Dangote Refinery raised its ex-depot PMS price by N100 per litre, about 12 percent, as Brent crude climbed 26 percent to over $84 per barrel.
• The refinery absorbed roughly 20 percent of the cost escalation to cushion the domestic market impact.
• NNPC supplies only about five crude cargoes monthly against the 13 the refinery needs, forcing procurement through costlier international traders.

Dangote Petroleum Refinery and Petrochemicals raised its ex-depot price of Premium Motor Spirit by N100 per litre this week, a 12 percent increase it says reflects only part of the actual cost shock rippling out of the Middle East conflict.

The refinery said it deliberately absorbed about 20 percent of the cost escalation to limit the damage to Nigerian consumers, even as Brent crude benchmarks surged roughly 26 percent within a short period to trade above $84 per barrel. China’s decision to ban gasoline and diesel exports tightened global supply further, pushing up both crude and freight costs simultaneously.

The refinery offered a pointed comparison to underline the scale of the pressure. When it last sold petrol at N774 per litre, crude oil landed in its tanks at approximately $68 per barrel. Today, Nigerian crude commands a $3 to $6 premium above Brent, and adding freight of $3.50 per barrel pushes the landing cost to between $88 and $91 per barrel.

The crude supply gap driving the problem

Part of Dangote Refinery’s cost problem traces directly to a domestic supply shortfall. The Nigerian National Petroleum Company Limited delivers roughly five crude cargoes per month to the refinery, paid for in naira at international market rates plus a premium. The refinery needs 13 cargoes monthly to fully meet domestic demand.

That gap forces the refinery into the open market, where it buys foreign exchange at prevailing rates and procures crude through international traders who charge additional premiums above market price. The situation worsens because some upstream producers have not met their obligations to supply crude to the refinery under the Petroleum Industry Act.

Why Nigeria is better off than most markets

Despite the pricing pressure, the refinery argued that domestic production gives Nigeria meaningful insulation from the worst of the global supply shock. Refineries in other countries have shut down or cut output as the Middle East conflict disrupts logistics and raises input costs. Because Dangote Refinery prioritises the Nigerian market, the country avoids the full force of a global product scarcity that is hitting import-dependent nations harder.

The refinery said it remains committed to stabilising energy supply even as it continues sourcing crude at prevailing international PMS price from both local and foreign suppliers.