S&P Global Commodity Insights has said the Dangote Refinery is helping to shield Nigeria from the impact of rising global fuel prices by keeping domestic petrol prices relatively stable despite increasing international costs.
Gatekeepers News reports that in its latest market intelligence report, the global analytics platform said the refinery has maintained fuel prices within a commercially sustainable range, even as global petrol prices, freight charges and supply constraints continue to push up import costs across West Africa.
According to the report, fuel importers supplying the Nigerian market are becoming increasingly concerned about the sharp rise in international petrol prices, which traders attribute to higher global fuel costs and escalating shipping expenses.
S&P said market participants believe petrol prices in Nigeria are effectively being “capped by Dangote prices,” limiting the ability of importers to transfer rising international costs to local consumers.
One trader quoted in the report said Nigerian-specification petrol cargoes remain under pricing pressure because Dangote Refinery has maintained its coastal sales prices, despite mounting increases in international market costs.
The trader noted that while petrol meeting Ghanaian specifications currently attracts higher premiums, the pricing strategy adopted by the refinery has continued to restrain prices in the Nigerian market.
Another market participant said fuel prices in Lomé, Togo, have risen above Dangote Refinery’s sales prices, effectively eliminating arbitrage opportunities for traders.
S&P Global also reported that the cost of transporting clean petroleum products from northwest Europe to West Africa has increased significantly, rising from $29.70 per metric tonne at the end of June to $37.12 per metric tonne. The increase was attributed to the diversion of vessels to alternative markets, which has tightened shipping capacity.
The report further noted that diesel markets have come under pressure following reduced supplies of Russian Black Sea cargoes, resulting in higher prices for high-sulphur gasoil across West Africa and increasing the cost of fuel imports into the region.
Despite these global market pressures, S&P said Dangote Refinery has continued its strategy of gradual price moderation, helping to cushion the domestic market from the full impact of rising international fuel costs.
However, the report noted that on July 14, Dangote Refinery suspended the sale of petroleum products in naira, switching transactions to US dollars. This move marked a significant change in its sales policy amid evolving market conditions.
