Nigeria is reasserting its significance as a major player in the global oil market. Recent activities at the colossal Dangote refinery have had a noticeable impact on prices. Initially, purchases of U.S. crude barrels by the refinery drove up the crude futures curve. However, a subsequent decision to sell those barrels caused oil prices to drop.....CONTINUE READING THE ARTICLE FROM THE SOURCE
Located just outside Lagos, the Dangote refinery will be capable of processing 650,000 barrels of crude oil per day once fully operational. This capacity rivals the largest refineries in the United States and is more than 50% larger than Europe’s biggest refinery.
The refinery’s importance is underscored by data from the International Energy Agency. If OPEC+ follows through with plans to increase supply next year, the market could see a surplus of about 860,000 barrels per day. The Dangote refinery’s influence could significantly affect this balance. While bringing a refinery of this scale online is complex and has faced delays, its eventual production will revolutionize fuel markets across West Africa. This shift will disrupt long-standing trade flows, particularly in Europe, where Nigeria has traditionally sourced much of its fuel supplies. Aliko Dangote, the billionaire entrepreneur behind the refinery and Africa’s richest person, announced that the plant is expected to start producing fuel by August. However, some industry experts remain skeptical, with consultancy firm FGE suggesting that gasoline production might not begin until at least September due to technical issues with some of the plant’s units. Another critical aspect is the refinery’s feedstock. The facility was designed to process Nigeria’s own crude oil. This vision was challenged when Dangote began purchasing U.S. supplies, causing a stir. Nigeria has since announced plans for its refineries to pay for oil in local currency and to process up to 445,000 barrels per day of domestic crude. How this will be implemented remains uncertain.
If successful, this strategy would reduce the availability of Nigerian crude for international buyers, particularly in Europe. In a global oil market currently dominated by concerns over war, economic slowdowns, and production cuts, Nigeria’s role is set to become an increasingly important topic among traders in the coming months.
