The Dangote Petroleum Refinery has significantly impacted global crude oil trade flows, retaining 13 percent of Nigeria’s crude oil exports for domestic consumption in 2024, a new report by Reuters has revealed.
This development, which saw Nigeria import 47,000 barrels per day of US oil, has raised concerns among industry experts.
“The Dangote Refinery, alongside other new refineries in the global south, has reportedly altered the global flow of crude amidst sanctions on Russian oil,” the report stated.
The 650,000bpd capacity Dangote Refinery, despite its reliance on domestic crude oil, imported US WTI crude in 2024, contributing to an increase in Nigeria’s oil imports from the United States.
The report also highlighted a two percent decline in global crude oil export volumes in 2024, the first such decline since the COVID-19 pandemic. This shift in global oil trade flows is attributed to a confluence of factors, including:
- Geopolitical shifts: The war in Ukraine, sanctions on Russia and Iran, and the conflict in the Middle East have significantly disrupted traditional trade routes.
- Increased demand for US oil: European refiners, facing reduced access to Russian oil, have increased purchases from the US and other sources like Guyana.
- New refinery capacity: The emergence of new refineries, such as the Dangote Refinery, has altered regional demand patterns and influenced crude oil sourcing decisions.
The report further emphasized the need for Nigeria to address the challenges posed by its growing reliance on crude-for-loan agreements, which could potentially extend until 2029.
NACCIMA, in a separate report, urged the government to explore alternative debt financing mechanisms, such as Dutch auctions, to optimize borrowing costs and reduce the country’s vulnerability to external shocks.
This analysis underscores the complex and evolving nature of the global oil market and highlights the significant impact of geopolitical events and new market entrants on global crude oil trade flows.
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