Why Fuel Prices Don’t Drop Overnight, Dangote Explains, Announces Another Cut

Dangote Petroleum Refinery has explained why pump prices do not fall immediately when global crude prices decline, saying local product pricing is tied to the cost of crude bought weeks or months earlier—not day-to-day international quotations.

In a statement on petroleum product pricing, the refinery said it has implemented multiple reductions since May 30, 2026, cutting its ex-depot prices of Premium Motor Spirit (PMS) by a cumulative over N200 per litre, Automotive Gas Oil (AGO) by N300 per litre, and Jet A1 aviation fuel by N520 per litre, despite processing crude purchased when prices were far higher than current levels.

The company announced a fresh N50 per litre reduction—its fourth cut in one month—as it begins to benefit from cheaper crude entering its production cycle.

Dangote said refinery pricing “does not move in tandem with daily international crude oil quotations” because crude is typically procured under commercial contracts linked to monthly average pricing mechanisms, with delivery and processing taking time.

As a result, the products currently supplied, the company noted, are being made from crude inventories acquired at significantly higher prices than today’s benchmark. Dangote disclosed that the average landed cost of crude processed was about $124.88 per barrel in May and $95.25 per barrel in June, compared with the current international benchmark of roughly $71.01 per barrel.

It also stressed that crude purchases are not based on the headline ICE Brent simulated $78.19 ▼0.26% number frequently cited in the media, but on a Dated Brent plus market premium, freight and logistics costs basis—pushing actual landed costs above benchmark quotes.

The refinery said it previously absorbed part of the impact of rising crude prices to support market stability, reduce inflationary pressures and cushion consumers from global energy volatility—arguing this helped keep Nigerian prices below those in neighbouring countries, even after taxes.

With lower-cost cargoes now entering its system, Dangote said it has started a phased pricing adjustment approach, anchored on “actual production economics and inventory costs” rather than short-term market swings.

Dangote said the refinery is supplying volumes “sufficient to meet national demand,” describing domestic refining as a stabilising factor that can reduce import dependence, conserve foreign exchange and improve price stability.

It added that Nigerians should expect further price moderation as cheaper inventories replace higher-cost crude stocks, “provided international market conditions remain favourable.”