Dangote Refinery cuts fuel prices again, signals further moderation

Dangote Refinery, Africa's largest oil refinery, has once again reduced the ex-depot price of Premium Motor Spirit (PMS), commonly referred to as petrol, by N50 per litre. This marks the fourth such reduction within a single month, bringing the total cumulative decrease in PMS ex-depot prices since May 30, 2026, to N200 per litre. As a result, the current ex-depot price stands at N1,075 per litre. Alongside this, the refinery has also reduced the ex-depot price of Automotive Gas Oil (AGO) by N300 per litre and Jet A1 aviation fuel by N520 per litre over the same period. These adjustments indicate a continued effort by the refinery to pass on the benefits of lower production costs to consumers, despite having procured crude oil at much higher international prices earlier in the year.

The refinery attributed these price cuts to the ongoing efforts to ensure that Nigerians benefit from favorable market conditions while maintaining the long-term viability of domestic refining operations. In a recent statement, the company emphasized that petroleum product pricing does not directly reflect daily fluctuations in international crude oil markets. Crude oil is typically purchased several weeks or months prior to processing, meaning that the products currently entering the market were derived from crude oil bought when international prices were significantly higher.

According to the refinery, the average landed cost of crude processed was approximately US$124.80 per barrel in May and US$95.25 per barrel in June, compared to the current international benchmark of around US$71.01 per barrel. However, the refinery clarified that its crude procurement costs are not solely based on the widely cited ICE Brent benchmark. Instead, they are calculated using a Dated Brent basis, which includes applicable market premiums, freight, and logistics costs. This results in actual feedstock costs that differ significantly from standard benchmark prices.

Despite the substantial increase in crude acquisition costs during the relevant period, Dangote Refinery chose not to fully transfer these increased expenses to consumers. Rather, it absorbed a considerable portion of the additional costs to support market stability and protect Nigerians from the volatility of global energy markets. This strategy has kept petroleum product prices in Nigeria lower than those in neighboring countries, even after considering applicable taxes.

As lower-priced crude oil shipments begin to integrate into its production cycle, the refinery has started implementing systematic price reductions in phases. The most recent N50 per litre cut is part of this ongoing process, reflecting a pricing strategy grounded in real production economics and inventory costs rather than short-term fluctuations in international oil markets. The refinery highlighted that Nigeria now benefits from the stabilizing effect of its domestic refining capacity, which meets national demand and enhances energy security by reducing reliance on imports, conserving foreign exchange, and providing better price stability for both consumers and businesses.

In addition to adjusting product prices, Dangote Refinery has also taken steps to increase market accessibility. It has lowered the ex-depot price of PMS to N1,075 per litre and aligned its coastal loading price to the same rate. Furthermore, the refinery has suspended its previous consortium marketing arrangement, allowing all qualified marketers to load petrol at its gantry. Previously, this exclusive arrangement included companies such as NIPCO Plc/11 Plc, MRS, TotalEnergies, Conoil, AA Rano, AYM Shafa, Rainoil/Eterna, Ardova Plc, and NNPC Retail, among others.

This change aims to make locally refined petrol more competitive against imported alternatives and expand access to supplies for marketers across the nation. Industry insiders believe that this move will intensify competition in the downstream sector, leading to improved product availability and enhanced distribution throughout the country. The decision aligns with government and regulatory body expectations that domestic petroleum product prices should reflect current international market conditions under the deregulated framework.

Stakeholders anticipate that this new pricing structure will exert pressure on fuel importers and private depot owners, prompting them to reassess their pricing strategies to stay competitive. If marketers choose to pass on these savings to consumers, it could lead to further reductions in depot prices and ultimately lower pump prices for motorists. This development underscores Dangote Refinery's increasing influence on Nigeria's downstream petroleum market, where its pricing decisions have become a critical reference point for other suppliers.