Khaberni - Amid the sharp rise in oil shipping costs and the acceleration of disruptions in global energy markets, the management of the Dangote refinery in Nigeria has warned of increasing consequences that heavily dependent countries may face, with escalating tensions and rising maritime transportation and insurance costs.
The CEO and Managing Director of the refinery, David Bird, said that countries dependent on fuel imports would be most vulnerable to the impacts of current market volatility, at a time when oil tanker costs have risen to unprecedented levels.
Bird explained during a press conference that the fees for transporting fuel shipments via oil tankers had sharply increased, with the shipping cost of a single shipment rising from about $800,000 to nearly $3.5 million, amid supply chain disruptions and the rise in maritime insurance premiums associated with geopolitical risks.
This significant increase reflects the pressure on global fuel markets, as volatility continues in crude oil prices due to political and security tensions affecting maritime trade routes and energy supplies.
Alongside these developments, gasoline prices in Nigeria have seen successive increases in recent days, as the refinery raised the warehouse sale price several times in response to rising crude oil and shipping costs.
The price per liter gradually increased from about $0.55 to $0.62, then to about $0.71, before reaching approximately $0.84 per liter, directly reflecting the increasing pressures on production and supply costs.
These increases come at a time when crude oil prices are experiencing significant fluctuations, with global prices jumping within a few days from the mid $60 per barrel range to near $120 per barrel, a clear indicator of the instability dominating the energy markets.
Bird noted that such conditions doubly affect countries dependent on importing oil products, as they bear both the rise in crude prices and transportation and insurance costs at the same time.
Despite these pressures, refinery officials believe that having a significant local refining capacity gives Nigeria a greater margin of protection compared to countries that fully rely on fuel imports.
Producing fuel locally reduces reliance on imported shipments that may be delayed or sharply increase in cost during international crises, helping to avoid supply shortages or long queues that accompanied past energy shocks.
However, Bird clarified that the refinery is still operating within the dynamics of the global commodity market, as the crude oil used by the refinery is purchased at international reference prices, even within oil exchange arrangements with the government in the local currency (Naira).
He added that the refinery is currently operating at a production capacity of about 650,000 barrels per day, with the possibility of increasing it to 700,000 barrels per day, enhancing its ability to meet local demand despite fluctuations in global markets.
