Nigeria’s diesel replacement cost has risen to about N1,920 per litre as surging global crude prices and continued shipping disruptions around the Strait of Hormuz increase the cost of fresh imports.
Brent crude rose 4.59 per cent to $104.80 a barrel on Thursday, while West Texas Intermediate (WTI) gained 4.79 per cent to $92.51, according to live Oilprice data. Murban crude also increased 3.79 per cent to $110.70.
Brent has gained $16.52 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 current replacement cost of imported Automotive Gas Oil (AGO) is 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.
Existing imported stocks can still trade between N1,700 and N1,765 per litre because they were purchased at lower crude prices. Fresh cargoes, however, are exposed to higher crude, freight, insurance and financing costs.
The pressure is being compounded by continued disruption to shipping through the Strait of Hormuz, a major 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 Hormuz 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 would be closed, adding uncertainty to efforts to establish controlled shipping corridors.
EnergyXchange estimates that a further escalation could push diesel replacement costs towards N1,985 per litre. The scenario assumes an additional cost equivalent to about 10 per cent of cargo value, based on speculation that vessels may 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, while businesses holding older stocks can continue to sell at prices reflecting the lower crude costs at which the products were purchased.
The development comes as Dangote Refinery tightens its commercial arrangements. The refinery has said unpaid PMS gantry transactions will no longer remain protected and will instead be renegotiated at the prevailing settlement price.
PMS purchases are also being channelled through an approved consortium of 20 marketers.
EnergyXchange clarified 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.
