Dangote Refinery drives U.S. oil demand as global crude prices rise
BY MOTOLANI OSENI
Nigeria’s Dangote Oil Refinery is significantly boosting demand for U.S. West Texas Intermediate (WTI) crude, reinforcing economic ties between the two nations as global oil prices recorded their first weekly gain since mid-May.
The refinery, which has an installed capacity of 650,000 barrels per day, is now purchasing a third of its crude from the United States, particularly the WTI Midland grade, according to Bloomberg ship-tracking data.
This share has almost doubled in 2024 as the facility scales operations. Owned by Africa’s richest man, Aliko Dangote, the refinery’s demand for American crude is driven by strategic and operational reasons, including the higher gasoline yield of WTI and the availability of the grade following reduced Asian demand due to U.S.-China trade tensions. Nigerian crude supply constraints have also contributed to this shift.
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The refinery, located near Lagos, began fuel production in 2024, with diesel and naphtha output starting in January and gasoline production slated for September. Analysts suggest that WTI will make up a larger share of the refinery’s imports in June.
Traders project that Dangote’s WTI Midland intake could hit 14 million barrels this summer, with Vitol Group identified as the leading supplier. The choice of WTI also reflects a broader market realignment. The grade has become dominant among global benchmarks following concerns over the declining production of traditional North Sea grades.
In a related development, Dangote has named the main access road to the refinery after President Bola Tinubu in recognition of his support for the project and his push for private-led infrastructure development.
The announcement was made during the commissioning of the Deep-Sea Port Access Road connecting the Dangote Fertilizer Plant to Eleko Junction in Lagos. Dangote praised the President’s commitment to creating an investor-friendly environment and noted the strategic importance of the access road, which links Nigeria to neighbouring countries like Chad and Cameroon and connects with major expressways such as the Sagamu–Benin route.
Meanwhile, crude oil markets saw a rebound, with prices settling $1 higher per barrel at the close of trading. West Texas Intermediate crude ended the week at $64 per barrel, marking a 2 per cent gain and breaking a three-week losing streak. A better-than-expected U.S. jobs report and renewed trade talks with China lifted global growth sentiment. Supply-side factors also supported the price recovery, as nine OPEC members under production caps increased output less than anticipated.
While Iraq and the UAE maintained or marginally increased output, Libya ramped up production to a 13-year high of over 1.3 million barrels per day. Total OPEC output rose to 27.54 million barrels per day in May, up by 200,000 from April. Analysts believe these shifts, combined with strong refinery demand from players like Dangote, could impact pricing and trade dynamics in the months ahead.
