S&P: Dangote Refinery has become benchmark for petroleum pricing across West Africa

Dangote Petroleum Refinery has continued to cushion Nigerians from the impact of rising global fuel prices, maintaining relatively stable domestic petroleum prices despite mounting international market pressures, according to the latest market intelligence from S&P Global Commodity Insights.

The report noted that while international gasoline prices, freight costs and regional supply constraints have pushed up the cost of imported fuel across West Africa, Dangote Refinery has kept its prices within a commercially sustainable range, limiting the ability of importers to transfer higher costs to Nigerian consumers.

According to S&P Global Commodity Insights, fuel importers supplying the Nigerian market are becoming increasingly worried over the surge in international gasoline prices, with traders attributing the development to higher global product values and escalating shipping costs.

The report quoted market participants as saying petrol prices in Nigeria are effectively being “capped by Dangote prices,” making it difficult for importers to compete or reflect higher international replacement costs in the domestic market.

One trader quoted in the report explained that although gasoline meeting Ghanaian specifications is currently trading at higher premiums, Nigerian specification cargoes remain constrained because Dangote Refinery has maintained its coastal sales prices despite increasing international market pressures.

“Lomé values have risen above Dangote sales prices, which has shut the arbitrage,” the trader said, indicating that importing petrol into Nigeria has become commercially unattractive under current market conditions.

S&P also highlighted the sharp rise in freight costs, noting that the cost of transporting clean petroleum products from Northwest Europe to West Africa increased from $29.70 per metric tonne at the end of June to $37.12 per metric tonne as vessels repositioned to serve other markets.

The report added that diesel markets have also tightened following reduced supplies of Russian Black Sea cargoes, driving up prices for high-sulphur gasoil across West Africa and further increasing the cost of imports.

Despite these global headwinds, Dangote Refinery has continued to moderate domestic fuel prices.

“Since the end of May, the refinery has reduced the ex-depot price of Premium Motor Spirit (PMS) by more than N200 per litre, Automotive Gas Oil (AGO) by N300 per litre, and Jet A1 aviation fuel by N520 per litre, even while processing crude oil purchased when international crude prices were significantly higher.”

“The refinery has consistently maintained that its pricing reflects the actual cost of crude procurement rather than short-term fluctuations in international Brent crude prices, explaining that crude oil is purchased weeks or months ahead under commercial contracts linked to monthly average pricing mechanisms.”

Industry analysts said the latest S&P assessment underscores the strategic value of Nigeria’s domestic refining capacity in protecting the country from external supply disruptions and volatile global energy markets.

According to the analysts, without the 650,000-barrel-per-day Dangote Refinery operating at scale, Nigeria’s reliance on imported petroleum products would likely have translated into significantly higher pump prices amid rising international product prices and freight costs.

The report also noted that Dangote Refinery has increasingly become the benchmark for petroleum pricing across West Africa, with market participants acknowledging that its pricing strategy is shaping regional fuel markets.

Importers, S&P observed, are finding it increasingly difficult to compete whenever international replacement costs exceed the refinery’s domestic prices.

They added that as geopolitical tensions, tightening fuel supplies and higher shipping costs continue to reshape global petroleum markets, Dangote Refinery is emerging not only as Nigeria’s dominant supplier of refined products but also as a stabilising force for fuel pricing across West Africa.

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