Nigeria gains from oil surge but refining limits offset benefits amid falling imports
UNCTAD's 2026 report says Nigeria and fellow oil exporters Angola, Guyana and Kazakhstan stand to gain from higher global energy prices triggered by Middle East conflict disrupting supplies through the Strait of Hormuz, which pushed Brent crude from $70 to over $110 per barrel. However, Nigeria's insufficient domestic refining capacity means gains from crude export earnings could be offset by rising costs for refined petroleum products.
Despite this challenge, Nigeria's petrol imports are falling significantly as domestic refining expands. Nairametrics reported Dangote Petroleum Refinery supplied about 50 million litres of petrol daily to the domestic market in first half 2026. Nigerian Midstream and Downstream Petroleum Regulatory Authority data shows average daily petrol imports dropped 26% to 14.6 million litres in August 2026 from 19.7 million litres in July. National Bureau of Statistics reveals Nigeria's petrol import bill plunged 96.15% to N87.40 billion in Q1 2026 from N2.27 trillion in Q1 2025.
Meanwhile, the Federal Government clarified on October 9 that the 30-day petrol discount at NNPC Retail Limited stations is funded by the retailer's margins, not the federal budget or Federation Account. Minister of Finance Taiwo Oyedele explained NNPC Retail absorbs the discount by reducing its margin while continuing to buy petrol from Dangote Refinery and other suppliers at market prices. He warned that restoring petrol prices to pre-reform levels could cost over N20 trillion annually, while a N500 per litre intervention would exceed N16 trillion yearly.
This means while Nigeria earns more from crude oil exports, limited refining capacity keeps domestic fuel prices vulnerable to international markets. Will you adjust your budget or travel plans as fuel costs respond to global oil prices and the pace of local refining expansion?