Nigeria recorded the sharpest increase in petrol prices across Africa during the first half of 2026, with pump prices surging by 39.5 per cent as the Middle East conflict disrupted global crude oil supplies and exposed the country’s vulnerability to external market shocks despite growing domestic refining capacity.

The disclosure was contained in the Nigeria Half-Year Downstream Industry Report (January–June 2026) released on Tuesday by the Major Energies Marketers Association of Nigeria.

According to the report, the conflict involving Israel, Iran and the United States, which began on February 28, 2026, triggered widespread uncertainty in global oil markets, sending crude oil prices above $100 per barrel and sharply increasing the cost of transporting petroleum products worldwide.

The report explained that the temporary disruption of shipping through the Strait of Hormuz forced oil tankers to abandon the traditional route and sail around the Cape of Good Hope, more than doubling voyage time from about 18 days to nearly 40 days.

MEMAN stated, “During the first half of 2026, severe geopolitical tensions in the Middle East sparked immediate supply anxieties, injecting a heavy risk premium that drove international crude benchmarks past $100/bbl.

“This price surge was quickly compounded as the conflict bottlenecked traffic through the Strait of Hormuz, forcing maritime oil tankers to reroute around the Cape of Good Hope and stretching what is typically an 18-day voyage into a nearly 40-day journey.”

The association said Nigeria’s deregulated petrol market transmitted the global price shock directly to consumers, making the country the hardest hit in Africa.

It said, “Operating under a newly deregulated system, Nigeria experienced an immediate price transmission at the pumps. Data from the height of the crisis revealed that Nigeria recorded a 39.5 per cent gasoline price surge, the sharpest increase across Africa, more than doubling the price jumps seen in regional peers like Egypt (14.3 per cent).”

Despite the sharp rise in prices, the report said the period also marked a significant turning point in Nigeria’s downstream petroleum industry as local refining displaced imported fuel at an unprecedented pace.

According to MEMAN, the expansion of the Dangote Petroleum Refinery significantly reduced Nigeria’s dependence on imported Premium Motor Spirit.

The report stated, “Against the backdrop of this intense price shock, the downstream sector achieved a significant structural shift away from import dependence toward domestic refinery supply, driven primarily by the operational scale-up of the Dangote Refinery, which by the review period accounted for the majority of local PMS supply.”

It added, “Premium Motor Spirit (PMS) local refining share expanded from 38.9 per cent in 2025 to 81.7 per cent over the review period. Concurrently, local units met an average of 64 per cent of diesel demand, while domestic gas processing facilities captured 90.5 per cent of the cooking gas market.”

However, the association warned that increased domestic refining had yet to eliminate Nigeria’s dependence on imported petroleum products. According to the report, local refinery production remained below national demand during critical periods between February and April, forcing regulators to approve fuel imports to prevent shortages.

MEMAN said, “However, the charts also highlight that domestic production alone was still structurally unable to fully bridge national demand, especially during peak periods. This supply-to-consumption deficit became visually evident between February and April, when the national consumption curve systematically crossed above domestic refinery output lines.”

According to MEMAN, “The high-cost, volatile open-market environment forced aggressive realignments in inventory management across the value chain, as marketers optimized liquidity by drawing down physical buffers rather than holding expensive static wet stocks.”

It added, “This structural shift caused national PMS stock sufficiency to drop progressively from 33 days in January to a low of 16 days by May, falling drastically short of the statutory 30-day safety benchmark, before recovering to roughly 20 days in June as licensed imports began filtering into the system.”

The marketers warned that the rapid depletion of fuel reserves highlighted the need for government-backed strategic petroleum reserves to cushion future global supply disruptions.

The report stated, “The rapid depletion of refined sufficiency days during the global shipping crisis underscored Nigeria’s lack of a resilient buffer, prioritizing the urgent downstream requirement to establish robust, state-backed Strategic Product Reserves and a dedicated Crude Oil Feedstock Reserve to insulate domestic refineries and consumers from sudden external supply chain closures.”

MEMAN also disclosed that persistently high fuel prices forced consumers to cut back on fuel purchases. It stated, “Furthermore, sustained open-market pricing triggered strong consumer demand elasticity, reducing average daily consumption by 22.3 per cent for PMS and 17.5 per cent for AGO.”

The association maintained that while Nigeria’s downstream reforms were beginning to yield results through higher domestic refining capacity, effective regulation would remain essential to sustain competition and protect consumers.

It added, “As domestic refining expands and the downstream sector evolves, sustained regulatory vigilance will remain essential to fostering fair competition, protecting consumers, strengthening investor confidence, and ensuring that the benefits of ongoing reforms are realised across the entire petroleum value chain.”

Under a section titled “Impact of the Middle East Conflict – Strait of Hormuz,” MEMAN said the conflict fundamentally altered global petroleum trade routes after the strategic waterway became temporarily inaccessible.

The report explained that suppliers increasingly shifted cargoes from the Persian Gulf to the U.S. Gulf Coast and West Africa as shipping companies sought safer alternative routes.

According to MEMAN, “The start of the conflict in the Middle East on 28th February 2026 and the subsequent temporary closure of the Strait of Hormuz significantly reshaped global crude oil and petroleum product trade flows during the first half of the year. Under normal market conditions, the Gulf serves as the primary export hub for refined petroleum products moving to Europe, Asia and parts of Africa.”

It continued, “However, with access through the Strait severely restricted, cargoes were rerouted to alternative supply sources, particularly from the U.S. Gulf Coast and West Africa. The longer sailing distances, coupled with higher freight and insurance costs, increased delivered product costs and placed additional pressure on global shipping capacity.”

MEMAN further stated, “Under normal conditions, some Gulf-origin cargoes could reach key Asian markets in approximately 18 days via the Strait of Hormuz; however, rerouting around longer alternative routes extended voyage times to nearly 40 days, significantly delaying supply flows and increasing logistical costs. The disruptions reinforced the importance of diversified refining centers and demonstrated the growing strategic role of Atlantic Basin suppliers in maintaining global product availability during supply shocks.”

The first half of 2026 was one of the most volatile periods for Nigeria’s downstream petroleum sector since the full deregulation of the petrol market. Pump prices became fully responsive to movements in international crude oil prices, foreign exchange fluctuations, freight costs and supply chain disruptions following the removal of petrol subsidies.

Although the operational expansion of the 700,000-barrels-per-day Dangote Petroleum Refinery substantially reduced Nigeria’s reliance on imported petrol during the review period, local refining capacity was still insufficient to meet peak national demand, prompting the Nigerian Midstream and Downstream Petroleum Regulatory Authority to approve imports by selected marketers to maintain energy security.

The report underscores the opportunities and challenges of Nigeria’s transition to a market-driven downstream sector, where increased domestic refining has strengthened supply resilience but global geopolitical events continue to exert a significant influence on domestic fuel prices. (The PUNCH)

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