Nigeria has recorded the highest gasoline price increase among major African economies, with petrol prices rising to around ₦1,400 per litre despite the commencement of large-scale domestic refining at the Dangote Petroleum Refinery.
Petrol prices have increased by about 65 percent over the past year, underscoring Nigeria’s continued exposure to global oil market dynamics despite increased output from Africa’s largest refinery.
Nigeria now leads Africa in fuel price growth, driven by subsidy removal, exchange rate pressures and rising global crude oil prices.
Despite its 650,000 barrels per day refining capacity, the Dangote refinery has yet to significantly lower domestic petrol prices.
Analysts attribute this to its reliance on imported crude and the global pricing framework that determines refined product costs.
Nigeria’s crude supply structure remains a key constraint with a substantial share of production committed to forward sales and debt-backed arrangements, limiting volumes available for domestic refining. As a result, the refinery relies heavily on imported crude priced at international benchmarks, eroding the cost advantage of local processing.
Instead of insulating the domestic market, petrol prices continue to track international benchmarks, particularly amid the recent surge in crude oil prices driven by geopolitical tensions in the Middle East.
The removal of fuel subsidies under the administration of Bola Tinubu has further exposed the market to price volatility. Under the current deregulated framework, petrol prices are largely determined by global oil prices, foreign exchange rates and logistics costs.
The recent rally in crude oil prices above $100 per barrel has added upward pressure on refined product prices globally. This has translated directly into higher pump prices in Nigeria, where import parity pricing remains a key determinant.
While the Dangote refinery has begun supplying refined products across West Africa and beyond, domestic consumers are yet to benefit from lower fuel costs. Instead, Nigeria is increasingly serving as a regional supply hub, exporting refined products to neighbouring countries where demand is rising due to global supply disruptions.
Rising petrol prices are accelerating inflation, with higher transport costs driving up food prices and eroding household purchasing power. Businesses are also facing increased operating costs, particularly in fuel-dependent and logistics-driven sectors.
For policymakers, the situation presents a complex challenge. While higher oil prices could support government revenue and improve foreign exchange inflows, the domestic economic impact remains negative due to rising energy costs.
Analysts say meaningful relief in petrol prices will depend on improved domestic crude allocation to local refineries, exchange rate stability and a moderation in global oil prices. Without these, Nigeria’s fuel market is expected to remain exposed to external shocks.
As Africa’s largest oil producer transitions to a fully deregulated downstream sector, the gap between local refining capacity and domestic price stability remains a critical issue for policymakers and market participants.