Nigeria is increasing crude oil allocations to its largest refinery as fuel prices climb due to ongoing disruptions linked to the Iran war.
The Nigerian National Petroleum Company (NNPC) has assigned seven crude cargoes for May delivery to the Dangote refinery, up from the five cargoes allocated in previous months, according to two trade sources and a refinery official who spoke to Reuters.
Fuel prices across Nigeria have reached record highs, and the Dangote Refinery has previously stated that it could only secure around five cargoes per month locally, well below the 13 to 15 cargoes it requires.
This shortfall has forced the refinery to rely on imports, where prices have been heavily influenced by instability in the Middle East.
Increasing crude supply to the 650,000 barrels-per-day facility, Africa’s largest refinery, may also reduce the volume of Nigerian crude available for export.
This comes at a time when the Iran war has significantly disrupted Middle Eastern oil supply, pushing global buyers to search more widely for available cargoes.
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“NNPC has allocated more cargoes to Dangote for May,” a senior Dangote official said. “While this will not completely meet our demands, it can help. We are also in negotiation with NNPC for more volumes.”
Crude supplied by NNPC is more affordable for the refinery due to lower transportation costs. Recently, Dangote has had to pay premiums of up to $18 per barrel above the Brent crude benchmark to secure international shipments. Based on Tuesday’s Brent price, this brings the cost to around $137 per barrel.
Despite these challenges, the refinery has increased gasoline supply to Nigeria’s domestic market this month, meeting slightly more than two-thirds of the country’s daily demand of 60 million litres. However, it has also raised petrol depot prices by about 13% in response to rising costs.
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Image Credit: LEADERSHIP Media Group
