Fresh concerns have emerged over a possible increase in petrol price and renewed pressure on the naira following reports that Dangote Petroleum Refinery may begin selling refined petroleum products in U.S. dollars.

The development comes amid renewed tensions in the Middle East, which have pushed global crude oil prices higher and raised fears of supply disruptions in the international energy market.

Industry analysts say that if implemented, dollar-denominated sales by Africa’s largest refinery could have significant implications for fuel pricing, foreign exchange demand and inflation in Nigeria.

The reports also come as the Federal Government seeks to ensure that domestic fuel prices reflect movements in international crude oil prices.

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However, the recent escalation of geopolitical tensions has reversed an earlier decline in crude prices, with benchmark oil prices rising again on concerns over global supply.

Sources familiar with the matter attributed the refinery’s reported plan to uncertainties surrounding the naira-for-crude arrangement between the Nigerian National Petroleum Company Limited (NNPC Ltd.) and Dangote Refinery.

The initiative was designed to allow the refinery to purchase locally produced crude oil in naira, thereby reducing dependence on foreign exchange and helping stabilise domestic fuel prices.

However, industry sources said crude supplies under the arrangement have fallen short of the refinery’s operational requirements, forcing it to rely more on internationally sourced crude purchased in U.S. dollars.

One source, who declined to be named because he was not authorised to speak publicly, said selling refined products in naira while buying a substantial portion of crude oil in dollars exposes the refinery to exchange-rate risks.

“If marketers continue buying in naira while the refinery purchases crude in dollars, exchange-rate losses become inevitable whenever the naira weakens,” the source said.

Analysts say a shift to dollar sales would require independent marketers to source foreign exchange before purchasing products from the refinery, increasing operating costs and exposing them to exchange-rate volatility.

Those additional costs could eventually be passed on to consumers through higher pump prices, particularly if the naira depreciates further against the U.S. dollar.

Economists also warn that increased demand for dollars by fuel marketers could put additional pressure on Nigeria’s foreign exchange market, potentially weakening the naira if foreign currency supply fails to keep pace.

Dr. Muda Yusuf, an economist, said, “It’s still too early to conclude because we are yet to hear an official position from Dangote Refinery. We need to wait for an official pronouncement before treating it as company policy.”

Yusuf, who is the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), said the reported move should be viewed primarily as a business response to the volatility in the global oil market rather than an arbitrary pricing decision.

According to him, renewed geopolitical tensions, particularly in the Middle East, have made international crude oil prices increasingly unstable, creating challenges for refiners.

“What is most disturbing now is the volatility in the global oil market. That, for me, is the bigger issue. With that volatility, you have to adjust your price almost every month.”

He noted that the renewed hostilities involving Iran have further heightened uncertainty in the oil market, making it difficult for refiners to maintain stable domestic pricing.

“It is that volatility that is the problem. Until we have a more stable global oil environment, we may continue to face these kinds of challenges.”

Yusuf said if Dangote Refinery eventually decides to sell products in dollars, it could simply reflect the company’s strategy for managing exchange rate and commodity price risks.

“If that is the way they want to manage the volatility, then we should see it as part of their strategy for responding to the geopolitical challenges affecting the global oil market.”

However, he warned that such a policy could have implications for Nigeria’s foreign exchange market.

“If people now have to pay in dollars, that means they have to source the dollars to buy the products. That could create additional pressure on the foreign exchange market and the exchange rate.”

Naira-for-crude not a discount scheme – Expert

Oil and gas analyst, Dr. Ayodele Oni in his comment said the “naira-for-crude arrangement was never a discount scheme.”

He said, “The refinery pays international benchmark prices for Nigerian crude. What the arrangement provides is currency matching: crude purchased in naira, products sold in naira. The moment NNPC is unable to deliver sufficient naira-denominated crude, that matching collapses and the refinery is left buying feedstock in dollars while selling in naira. No commercially rational operator can carry that foreign exchange exposure indefinitely.

“The refinery has had to import substantial volumes of crude in recent months, paid for in dollars, because domestic allocations under the arrangement have consistently fallen short of contracted expectations.

“The refinery’s position is stronger than many assume. This is because the refinery sits within a free zone regime, which has historically permitted it to transact in foreign currency, particularly for exports and coastal sales.

“The counterweight is the legal tender provisions of the CBN Act and the domestic crude supply obligation under Section 109 of the Petroleum Industry Act. The unresolved tension is that the naira-for-crude framework rests on policy directives rather than an enforceable statutory scheme, so every suspension becomes, in effect, a renegotiation lever.”

He also noted that a shift to dollar sales would push marketers into the foreign exchange market in large numbers, “pressuring the naira, raising pump prices, and feeding inflation through transport and production costs.”

“I expect a political rather than legal resolution, consistent with previous episodes in which government intervention restored naira sales within days,” he added.

Oni stated that the “durable fix” is to ensure “guaranteed crude allocations backed by enforceable delivery obligations on NNPC, or a credible hedging mechanism that covers the currency gap between crude purchase and product sale.”