…Middle East tensions and EU sanctions on Russia still creates volatility on petroleum prices.
…Dangote refinery makes Nigeria an important reference outside Europe without depending on European imports.
…Ex-Lome market predominantly serves West Africa especially the Nigerian market.
-Felix Douglas
The Major Energies Marketers Association of Nigeria (MEMAN), in partnership with S&P Global Commodity Insights held virtual webinar session with the theme “Market Fundamentals and Geopolitical Drivers.”
Speaking at the webinar in his opening remarks MEMAN Chairman, Huub Stokman said one of the roles of the association is to have reliable data and insights to support benchmarking, advocacy and policy engagement which is also to basically engage with the government and the public including all stakeholders and regulatory agencies in the downstream making sure that there is a healthy competitive downstream industry.
Stokman made it clear that the event is important adding that deregulation means a lot for every player in the market which is also in interest of the consumers.
The MEMAN Chairman reiterated that S&P Global’s vision is to strengthen market transparency which enhances efficiency of the market through deregulation.
A fully deregulated market is ethical to deal with and creates transparency. The market helps Nigeria in the interest of consumers to thrive and prosper, the MEMAN Chairman stated.
How does pricing works and impact Nigeria? How does the local supply demand both local and foreign production import works?
Stokman said MEMAN is delighted in partnership with S&P Global to work together with regulators, international partners, local and stakeholders to create a sustainable fuel market.
“I’ve got the utmost confidence in the experts of S&P Global that they will bring practical insights for Nigeria and West African markets because Nigeria cannot be in isolation as part of the global market.”
Geopolitics and the Price of Petroleum Products
Gary Clark, Associate Editorial Director for EMEA Clean Refined Products at S&P Global, spoke on geopolitical events, impact on current petroleum price and demand in different regions after subsidy including drop in consumption and current outlook on gasoline.
Gary emphasised on current supply, demand and pricing dynamics in Europe and West Africa.
According to the EMEA Director, the two markets of Europe and West Africa are closely interlinked, supply resilience amid geopolitical tensions and conflicts happening in the world.
The new diesel assessments that was launched has low sulfur diesel for West Africa which is also based in Nigeria including low STS Lome assessment which is based Togo.
New price assessments are reflecting local, regional supply and demand dynamics in West Africa. Prior to ramping up of supply from Dangote refinery, the region was reliant on imports from Europe, particularly for diesel and jet fuel.
Gary disclosed that Dangote refinery exports oil and diesel to meet West and Central African demand. There are also jet fuel to supply both the region and exporting to far destinations.
Fundamentally, price assessment which reflects West African supply and demand is part of roadmap or pathway for having its own regional price reference market with Nigeria and North West Europe.
The building of Dangote refinery in the region makes Nigeria to become an important reference outside Europe without depending on European imports of refined products which has also reduced.
On geopolitics in the globe, he made reference on Russia’s invasion of Ukraine in February 2022, which brought major volatility in diesel prices, but supply chains quickly readjusted and Europe stopped importing Russian diesel accompanied with EU sanctions.
From February 2023, refineries that relied on European funds were producing lot of diesel and flat prices came down substantially. These flat prices have been influenced by geopolitical tensions in the Middle East.
The US Treasury Department announced a major expansion of its blacklisted shadow fleet tankers shipping Russian oil on 10th January 10th 2025. This decision has dent Moscow’s ability to sidestep G7 price cap on Russian oil imports from the markets and imports into Europe are going through West Africa.
There have been sluggish economic growth in European countries, particularly Germany and Italy which has reduced industrial and transportation demand. It has resulted to high inflation interest rates dampening consumer demand which brought geopolitical issues presently in the world and creates price volatility spikes amid overlay of weak demand globally for refined products.
Continuing, Gary revealed that the market has become resilient due to supply shocks from Israel/Iran conflict raising tensions in the Middle East followed by EU’s announcement of its 18 sanctions on Russia. EU will ban import refined products made from Russian crude from 2026, in addition to secondary tariffs on India for importing Russian crude.
Part of the EU sanctions is that if a refinery was situated outside Russia, the refined products were usually defined as non Russian origin, but the situation will change from the beginning of 2026 on refineries based outside Russia. Refined products will no longer be imported into the EU.
Unfortunately as the war intensifies in the Middle East, Russia is back on focus with respect to refined products. The new measure in the spotlight is on India and Turkey. Both are key trade partners for Europe to fill the vacuum left by Russian oil products in 2022 after the first sanction on imports of crude. The new EU ban will potentially impact 250,000 barrels a day of diesel coming from Turkey and India which rely heavily on Russian crude oil; the European West African diesel gas markets are intertwined in Europe requiring diesel imports to meet its consumption needs.
However, Gary said Dangote refinery is meeting West Africa demands while exporting to Malaysia, Latin America and self sufficient in terms of jet fuel, this is quite an interesting geopolitical standpoint.
Jet fuel and diesel prices compete with one another. When jet fuel prices are above that of diesel, refineries will maximize their supply to the market. At present, jet fuel is better supplied in the market.
Taking a look at supply dynamics, the Middle East, US and India are now main sources of diesel supply into Europe since Russia has been sanctioned.
Turkey, Africa and Latin America are main importers of Russian diesel, and these relationships could be strengthened further but US secondary sanctions on India for using Russian crude as a feedstock but banning importation of refined products produced from Russian crude is another burning issue.
Comfortably, Dangote refinery is West Africa’s second largest refining in sub region in Africa behind North Africa.
Unless the region builds more refineries, there’s potentially going to be a structural import dependence on gasoline on the long term, Gary decried.
Ex-Lome Market Overview
Ogechi Nkwoji, Head of Economic Intelligence Research & Regulation at MEMAN spoke on Ex- Lome market which is an important part of Nigeria’s downstream petroleum trade.
Ogechi explained that Ex-Lome market in Togo predominantly serves West Africa especially the Nigerian market. Nigerians are the largest buyers.
Ex-Lome is the petroleum product cargo that are discharged and stored in floating storage vessels along the coast of Lome where buyers most of whom are Nigerians trade, charter smaller vessels to break in smaller products from these floating storages and transfer to Nigeria.
The export market offers an offshore trading company with majority international traders such as Trafigura, Glencore among others. They source for carbons, refined directly from the refineries, bring large cargo into Lome and make them available for purchase. They are intermediate traders between international and the local market acting like a bridge to marketers.
Some of these buyers owned smaller vessels, take products from floating storage vessels on lower cost.
Ogechi stated that Ex-Lome market evolved due to a decline in Nigeria’s local refinery underperformance, creating supply gap for the country. Progressive decline of the refineries made government to introduce importation of fuel.
In case there is maintenance in Dangote refinery, the Ex-Lome market will be relevant.
Ex-Lome market has advantages; it is central and strategically located in West Africa with good infrastructure and deep water. It is secured for traders including its flexibility for marketers. There is trans-shipping with bulk breaking for small traders. It doesn’t discriminate and open to all traders, creates platform for small buyers to trade petroleum products shuttled to Nigeria, discharged in various depots and distributed to retail outlets.
Gasoline Market Price Assessment
Matthew Tracey-Cook, Senior Price Reporter at S&P Global shared a comprehensive outlook on the gasoline market. He revealed that the heightened hostilities between Israel and Iran took its toll on international crude oil and gasoline price.
But after US strikes on Iran, there was cessation in hostilities and dramatically drop in oil and gasoline price fell with it. West African dynamics have been relatively weak with differentials fall.
He spoke on the West African trading differentials on gasoline. He compared Dangote refinery with European liquid benchmark.
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