Despite hosting Africa’s largest oil refinery, Nigeria is facing a sharp rise in gasoline prices. The Dangote Refinery which began operations in 2024, was expected to reduce fuel imports and stabilize domestic prices. However, gasoline prices have surged to 65%, the steepest increase among major African economies, as global crude oil prices climb above $100 per barrel.
The refinery, owned by Nigerian billionaire Aliko Dangote, started producing diesel and naphtha (used in chemical manufacturing) in early 2024 and began gasoline production later that year. At the onset of the US-‘Israeli’ war on Iran, the company said it would serve as a “stabilising force” in volatile markets. But rising costs and supply constraints have limited its ability to cushion domestic prices.
A key issue is the refinery’s reliance on imported crude. Despite Nigeria being a major oil producer, local supply has fallen short of expectations. Under the Petroleum Industry Act, domestic producers are required to supply crude to local refineries, but Dangote’s management said this has not been fully met.
“The high crude cost is compounded by the fact that Nigeria upstream producers have failed to supply crude oil to the refinery as required… forcing us to source a substantial portion through international traders who charge an additional premium,” the company said.
According to refinery CEO David Bird, the facility is currently receiving only a fraction of the crude shipments initially agreed upon, forcing it to turn to more expensive international sources. “All our cost inputs—from crude to freight and insurance—are impacted,” Bird said.
Although the refinery processed record volumes of crude in early 2026 and at one point supplied more than 60% of Nigeria’s fuel needs, its exposure to international markets has limited its ability to shield the country from global price shocks.
Nigeria’s oil is primarily exported to Europe, India, the United States, and other parts of Asia. A significant portion, estimated at nearly one-third, is used to pay off oil-backed loans to international players, while the new Dangote refinery is increasingly processing crude locally and supplying refined products across Africa. Due to current geopolitical tensions and rising global prices, some Nigerian crude and gas are being redirected to fill shortages in European markets.
The situation has been exacerbated by the US-‘Israeli’ war on Iran, which has disrupted supply routes and driven up global oil prices. At the same time, a significant portion of Nigeria’s own crude output is tied up in debt repayments to international lenders and energy firms, further reducing local availability.
For ordinary Nigerians, the impact has been immediate. Transport costs have surged, food prices have risen sharply, and businesses are struggling with higher operating expenses. With unreliable electricity supply across the country, many households and companies rely on fuel-powered generators, making them especially vulnerable to price increases.
The government has opted not to reinstate fuel subsidies, instead focusing on longer-term market reforms while offering limited short-term relief.
