Nigerian crude tops $70 amid Red Sea tensions, Dangote’s local oil push
Agency Report
Nigerian crude prices have surged above $70 per barrel, slightly outpacing international oil benchmarks, following renewed geopolitical tensions in the Red Sea and strategic shifts in domestic refining operations.
The price uptick comes amid mounting global concerns over supply disruptions and a strategic pivot by Nigeria’s Dangote Refinery to source all its crude oil locally by December 2025.
Brent crude futures for September delivery slipped to $69.91 per barrel on Wednesday, while West Texas Intermediate (WTI) dropped 0.4 per cent to $68, largely due to a surprise inventory build in the United States.
However, Nigerian grades defied the trend, buoyed by tighter regional supply and increased domestic refining demand.
The price volatility followed fresh attacks by Houthi militants in the Red Sea, where a Greek-operated bulk carrier, Eternity C, was targeted off Yemen’s coast. Reuters reported four crew fatalities due to drone and speedboat strikes, sparking fears of intensified maritime risks.
Oil market analyst Temitope Ogunleye told reporters, “The Houthi attack underscores growing instability in global shipping lanes, especially near critical oil transit routes. Nigerian crude is benefitting from regional pricing differentials and increased domestic demand from Dangote’s mega-refinery.”
According to energy consultant Oladimeji Adebayo, “The inventory builds signal potential supply overhang in the US, contrasting with Africa’s tighter supply situation. Traders are pricing Nigerian crude at a premium due to proximity to new refining capacity and fewer geopolitical hurdles compared to the Middle East.”
Contributing to the bullish sentiment around Nigerian crude is the operational strategy of the Dangote Refinery, which aims to stop importing crude oil and transition to 100 per cent local sourcing by the end of 2025.
The Lagos-based 650,000 barrels-per-day facility—Africa’s largest—currently processes around 550,000 bpd, with 53 per cent of its feedstock already sourced from Nigerian producers in June.
Devakumar Edwin, Vice President of Dangote Industries, said, “We expect some of the long-term foreign supply contracts to expire soon. Our goal is to fully transition to Nigerian crude by December. That shift supports local producers and strengthens Nigeria’s balance of payment.”
Nigeria’s 2024 oil policy, enforced by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), mandates domestic crude supply to local refineries under the Domestic Crude Supply Obligations (DCSO) framework.
This ensures that key facilities like Dangote receive consistent feedstock from indigenous producers.
Meanwhile, Petralon Energy has announced plans to ramp up production by 2,500 barrels per day at the Dawes Island field under PPL 259, through the completion of a new well.
This upstream expansion supports the broader industry shift toward supplying the local refining base.
Upstream strategist Dr. Amina Sule noted, “Nigeria’s oil future depends on an integrated value chain. From exploration to refining, the goal is to keep value within the economy.
