Dangote Refinery Tightens Grip on Fuel Market as Import Costs Soar

• Nigerian fuel importers are facing mounting pressure as higher global petrol prices and rising shipping costs squeeze profit margins.

Nigerian fuel importers are coming under fresh pressure as rising international petrol prices and increasing freight costs drive up the cost of importing fuel, while the Dangote Petroleum Refinery’s pricing continues to limit profitable import opportunities.

This was revealed in the latest Daily Refined Products Commentary released by S&P Global Commodity Insights, which noted that market participants are becoming increasingly concerned about shrinking margins in Nigeria’s petrol import market.

According to the report, traders said the Dangote Refinery’s pricing has effectively capped petrol prices in Nigeria, making it difficult for imported products to compete.

One market participant explained that premiums for Ghanaian-specification petrol are currently higher than those for Nigerian-specification fuel because domestic prices remain constrained by Dangote’s pricing policy.

“Prices are capped by Dangote prices,” the trader was quoted as saying.

The report also noted that petrol prices in Lomé, Togo, have risen above the Dangote Refinery’s selling price, effectively eliminating the arbitrage opportunity that previously allowed marketers to import fuel profitably into Nigeria.

“Lomé values have risen above Dangote sales prices, which has shut the arbitrage,” the report stated, adding that the same situation does not necessarily apply to Ghana.

Although traders had anticipated another increase in Dangote Refinery’s coastal petrol prices, the refinery maintained its previous pricing despite introducing a new dollar-based pricing mechanism, which analysts say could influence future prices.

Beyond pricing challenges, Nigerian fuel importers are also grappling with rising shipping costs.

According to S&P Global Commodity Insights, freight rates for transporting petroleum products from Europe to West Africa have climbed sharply as more vessels reposition across global markets.

The report showed that the Clean UKC-West Africa 37,000-metric-tonne freight rate increased to $37.12 per metric tonne, up significantly from $29.70 per metric tonne recorded at the end of June.

The diesel market is also experiencing tighter supply conditions.

S&P noted that reduced availability of Russian Black Sea petroleum products has pushed up the price of high-sulphur diesel across West Africa, keeping regional price spreads relatively narrow.

Market assessments by Platts, a division of S&P Global Commodity Insights, placed the FOB West Africa gasoline price at $1,053 per metric tonne, while the STS Lomé gasoline assessment stood at $1,078 per metric tonne, representing a premium of $58 per metric tonne over Eurobob benchmarks.

The report also assessed FOB Northwest Europe-West Africa cargoes at $1,005 per metric tonne, with a CIF net forward value of $1,042.25 per metric tonne.

For diesel, the STS Lomé assessment was placed at $1,173.50 per metric tonne, while the FOB West Africa diesel price was assessed at $1,233.50 per metric tonne.

The report concluded that unless international petrol prices and freight costs decline—or domestic pricing dynamics change—fuel importers in Nigeria are likely to continue facing tighter profit margins, with the Dangote Refinery remaining the dominant factor influencing petrol import economics in the country.