Amanze Chinonye
Escalating tensions between the United States and Iran have triggered renewed volatility in global energy markets, driving crude oil prices higher and coinciding with a major pricing shift by the Dangote Petroleum Refinery, which has moved bulk fuel transactions to a United States dollar-based system.
The latest surge in oil prices followed U.S. President Donald Trump’s announcement that Washington would reinstate a blockade targeting Iranian shipping and impose a 20 per cent reimbursement fee on cargo passing through the Strait of Hormuz.
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The development heightened concerns over the security of one of the world’s most strategic oil transit routes, which accounts for nearly one-fifth of global seaborne crude shipments.
By 5:20 a.m. (WAT) on Tuesday, Brent crude was trading at $84.66 per barrel, while West Texas Intermediate (WTI) stood at $79.61 per barrel. During Monday’s trading session, both benchmarks gained more than eight per cent, reversing almost all the losses recorded after last month’s ceasefire between Washington and Tehran.
The renewed geopolitical tensions have prompted traders to reassess global supply risks, despite the absence of any major disruption to physical crude exports. Market participants have already begun factoring in higher freight costs, increased war-risk insurance premiums and additional security expenses for vessels operating in the region.
Trump’s proposed 20 per cent levy on cargoes carried by vessels under U.S. naval protection has further unsettled shipping markets. The International Maritime Organization (IMO) has raised concerns over the legality of compulsory charges on international waterways, while industry stakeholders warn that the measure could increase transportation costs for crude oil and refined petroleum products.
Analysts expect refined fuel markets, including diesel, aviation fuel and petrol, to remain under pressure as traders anticipate higher logistics costs and potential delays in shipments from the Middle East.
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Amid the global market uncertainty, the Dangote Petroleum Refinery has introduced a new pricing structure that ends naira-denominated sales for bulk fuel transactions, with marketers now required to purchase products using U.S. dollars.
Under the revised pricing template, the refinery fixed the gantry price of Premium Motor Spirit (PMS), popularly known as petrol, at $0.779 per litre, while Automotive Gas Oil (diesel) will sell for $1.087 per litre. Jet A-1 aviation fuel is priced at $0.942 per litre, while coastal PMS supplies will sell at $1,044.62 per metric tonne. The refinery stated that the new arrangement does not apply to Liquefied Petroleum Gas (LPG).
The refinery also notified customers that previously issued naira-denominated Proforma Invoices and Deal Recaps for gantry and coastal transactions had been withdrawn and would no longer be accepted for payment.
Industry sources said the decision was aimed at aligning the refinery’s revenue structure with the currency used for crude oil procurement, thereby reducing its exposure to foreign exchange fluctuations amid persistent volatility in the global energy market.
The policy shift represents a departure from the Federal Government’s naira-for-crude initiative, introduced in 2024 to support local refining capacity, reduce pressure on foreign exchange reserves and help stabilise domestic fuel prices.
For Nigeria, the combination of rising global oil prices and dollar-based fuel pricing presents both opportunities and challenges. While higher crude prices could boost export earnings and government revenues, increased foreign exchange requirements for fuel purchases may put additional pressure on marketers and influence domestic pump prices.
With the Dangote Refinery playing a central role in Nigeria’s downstream petroleum sector, its pricing decisions are expected to significantly influence market dynamics.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
