Global Oil Price Surge Exposes Nigerian Refineries to Higher Costs, Expert Warns
An energy expert has raised alarms that Nigerian refineries are increasingly vulnerable to the volatility of the global oil market, with rising tensions in the Middle East driving up international crude prices. This situation is exposing local refineries that depend on imported feedstock to severe cost pressures, which could further escalate fuel prices across Nigeria.
Reliance on Foreign Crude Amid Local Production
Eche Idoko, the National Publicity Secretary of the Crude Oil Refineries Association of Nigeria (CORAN) and an energy expert, explained that the dependence of some local refineries on foreign crude supplies is a key factor behind the recent hike in petrol prices. Despite Nigeria's status as an oil-producing nation, these refineries continue to source crude from international markets, making them susceptible to geopolitical risks and market disruptions.
Idoko emphasized that this reliance subjects domestic refineries to foreign pricing systems, exchange rate fluctuations, shipping costs, and supply uncertainties. He stated, "As the conflict in Iran intensifies and global crude oil prices surge, local refineries in Nigeria that rely on externally sourced crude are increasingly exposed to severe price volatility. Their feedstock costs remain directly tied to the same geopolitical risks and market disruptions driving up international crude prices, placing them at a significant operational disadvantage."
Call for Improved Domestic Crude Supply
Idoko urged the federal government to prioritise the local supply of crude to domestic refineries, arguing that subjecting them to global market instabilities is avoidable. He stressed that Nigerian refineries should have easy access to locally produced crude rather than sourcing from international markets, which would enhance energy security and reduce exposure to external shocks.
He also called for greater transparency and consistency in crude allocation, noting that unclear supply arrangements discourage investment and long-term planning in the refining sector. An adequate and predictable supply is essential to improving refinery utilisation and reducing dependence on foreign sources, he maintained.
Push for Urgent Reforms
The CORAN spokesperson pointed out that rising crude prices globally are already pushing up production costs for local refineries, consequently driving up retail prices of petrol and other refined petroleum products in Nigeria. He described the current situation as a wake-up call for Nigeria to implement reforms that ensure local refineries are supplied with domestic crude under fair and transparent conditions.
Idoko argued, "The current global oil price surge should serve as a clear signal: Nigeria must prioritise its domestic refining ecosystem by ensuring that local refineries are sufficiently supplied with local crude under fair and transparent terms. Only then can the country begin to insulate its downstream sector from global volatility, stabilise product prices, and fully realise the strategic benefits of its hydrocarbon resources."
Petrol Marketers Advocate for Relief Measures
In related developments, petrol marketers have urged the federal government to introduce temporary measures to ease the burden of rising petrol prices. The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) highlighted that higher fuel costs are increasing transport fares and the cost of goods, calling for food subsidies and the adoption of alternative energy sources like compressed natural gas (CNG).
The association acknowledged that global crude oil price fluctuations influence domestic fuel pricing but stressed the need for immediate interventions to alleviate the impact on citizens. This call aligns with broader concerns about Nigeria's energy security and the need for sustainable reforms in the oil and gas sector.
