Nigeria’s diesel replacement costs have risen sharply as a surge in global crude prices and continued shipping disruptions around the Strait of Hormuz push up the cost of importing Automotive Gas Oil (AGO).
Brent crude rose 5.14 per cent to $105.30 a barrel on Thursday, while U.S. West Texas Intermediate gained 5 per cent to $92.69, according to live Oilprice data. Murban crude also increased 3.79 per cent to $110.70.
Brent has risen by $17.02 a barrel from $88.28 on October 2, when much of the diesel currently held in Lagos and the South-South was ordered.
EnergyXchange estimates that the replacement cost of imported AGO has risen to about N1,920 per litre, compared with Dangote Refinery’s N1,700 ex-gantry price.
The difference gives Dangote a price advantage of about N220 per litre over fresh imported diesel cargoes.
However, existing imported stocks can still trade at between N1,700 and N1,765 per litre because they were purchased when crude prices were lower. Fresh cargoes now face higher crude, freight, insurance and financing costs.
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The increase in replacement costs is being compounded by disruptions to shipping through the Strait of Hormuz, a key route for global oil supplies.
Kpler data cited by Reuters showed that only seven commodity vessels crossed the waterway on October 6, the lowest level since July 23. Crude flows through the strait also fell 27 per cent week on week to 10.1 million barrels per day, about 74 per cent of pre-war levels.
Shipping risks have remained elevated, with at least 12 tanker attacks, attempted attacks or harassment incidents recorded between September 28 and October 5, according to maritime security sources cited by Reuters.
Iran has also warned that routes it considers illegal through the strait will be closed, adding uncertainty to efforts to establish controlled shipping corridors.
EnergyXchange estimates that a further escalation could push diesel replacement costs towards N1,980 per litre. The projection assumes an additional cost equivalent to about 10 per cent of cargo value, based on speculation that vessels could be paying for safe passage, although this remains unverified.
At current prices, Dangote’s N1,700 per litre AGO gives marketers a significant cost advantage over fresh imports.
The development comes as Dangote Refinery tightens its commercial arrangements, including its decision to renegotiate unpaid PMS gantry transactions at the prevailing settlement price.
The refinery is also channelling PMS purchases through an approved consortium of 20 marketers.
EnergyXchange stressed that the N1,920 per litre figure is its replacement-cost estimate and not the official MEMAN landing cost. The estimate reflects movements in crude and freight from the October 2 reference point, while the official MEMAN bulletin remains the definitive daily reference for petroleum landing costs.
