This big oil company has suffered a curse – RT Africa

For Nigeria, Africa’s largest oil producer and one of its most populous nations, the closure of the Strait of Hormuz as early as 2026 exposed flaws that politicians and technologists have long preferred to ignore. The Strait of Hormuz is one of the world’s most productive waterways. About 21 kilometers wide at its narrowest point, it carries nearly 20% of the world’s oil trade, acting as the main artery of the global hydrocarbon economy. When the streak came down in March 2026, the price of Brent crude rose to $114 a barrel, the highest level since 2022 – in a matter of days.

In addition to crude oil, the shutdown disrupted the flow of petrochemicals and fertilizers, products of which the Gulf region is among the world’s top exporters. Like UNCTAD be consideredthe disruption exacerbated global economic problems in trade, prices, and finance, and threatened the food security of import-dependent nations from sub-Saharan Africa to South Asia. Nigeria was strong in that hair.

Why can’t Nigeria refine its own oil?

There is a stark irony at the heart of Nigeria’s energy story. The nation that sits atop some of the world’s richest hydrocarbon reserves has, for decades, been unable to produce enough oil for its population. Nigerians have paid the price for these structural contradictions through repeated fuel shortages, suffocating queues at petrol stations, and an economy constantly held back by the price of imported refined petroleum products. The Hormuz crisis simply removed whatever thin insulation of normalcy it had accumulated over the years.

The inauguration of the Dangote Refinery in 2024 was greeted with optimism. With an initial capacity of 650,000 barrels per day (bpd) and the intention to expand to 1.4 million bpd, it was positioned as a reform response to Nigeria’s chronic refining deficit and a statement of industrial independence.

Yet that promise is undermined by a fundamental contradiction: Nigeria’s oil, extracted from its own land, is systematically distributed far from its shores. International oil companies (IOCs) operating in the country have shown a continuous preference to export crude products to international markets instead of supplying local refineries. The result has been a structural grazing crisis; The Dangote Refinery has been forced to import raw materials from the US and other African countries, a situation that is almost a policy failure.

Nigerian National Petroleum Company (NNPC) reliability with partial payments in naira and dollars to supply the refinery has further undermined price stability and prevented stable domestic supply. Aliko Dangote, president of the Dangote Group, has announced publicly he lamented unwillingness of IOCs to sell crude directly to refineries, describing the situation as a structural obstacle to domestic energy security.

When the Hormuz crisis pushed global crude prices above $114 a barrel, this weakness turned into a major crisis.

The volatility of petrol prices in the first quarter of 2026 was a concern for ordinary Nigerians. Prices rose from ₦870 ($0.65) to ₦1,300 ($0.97) per liter in March 2026, reflecting an increase in international markets.

Although Dangote later reduced the pump price to ₦1,200 ($0.90) per liter as crude prices were controlled, the episode showed the complete exposure of Nigerian consumers. fragile of international market trends. For a population where most livelihoods depend on informal transport and small businesses, a 50% increase in fuel costs within a week is catastrophic.

When crude is promised abroad

Perhaps the most important and least discussed dimension of Nigeria’s energy vulnerability lies in its forward exports. contracts (FSCs). For context, crude oil sales contracts are structured financial agreements where NNPC Limited receives large upfront financing from lenders, often through a Special Purpose Vehicle, in exchange for pledging a specific amount of future crude oil production as repayment.

These instruments, originally designed to provide liquidity and budget forecasting to the federal government, have over time turned into a design trap. By locking Nigeria into selling crude at pre-agreed prices for a long period of time, the FSCs have eliminated its ability to benefit from rising prices during the kind of global crisis that the Hormuz shutdown represents.

Instead of spending $114 per barrel of crude oil, Nigeria was contractually obligated to honor the agreement reached at much lower rates. By 2025, FSC obligations had risen to ₦8.07 trillion ($6 billion), diverting raw materials away from domestic refiners and increasing supply shortages.

The paradox is profound: Nigeria cannot feed its own refinery because its crude has been promised, at reduced prices, to its foreign competitors.

A nation that cannot direct its primary natural resources towards its strategic priorities is, in a sense, still operating under conditions of resource dependence rather than resource ownership.

The downstream consequences of the energy crisis have been particularly troubling. Inflation has risen to more than 30%, driven mainly by the impact of rising transport costs on the price of food, consumer goods and industrial inputs. Fertilizer scarcitylinked to the disruption of supply chains in the Middle East, has increased the cost of agricultural inputs, thus putting food production under stress at a time when Nigeria cannot afford agricultural disruption. Small farmers in the country, who contribute a large part of the local food production, face the double injustice of high input costs and weakening the purchasing power of consumers.

Deficiency of petrochemicals disturbed industries ranging from plastics to textiles and manufacturing, thus adding to the downward pressure on the economy that is already affecting the Nigerian economy. The human cost of this disruption is not reflected in any GDP statistics, it is written in the rising cost of running schools, closed businesses of small traders, and agricultural communities that face growing seasons without cheap fertilizers.

What should be done?

None of this is irreversible. But changing it requires intellectual honesty about the structural origins of the crisis and the political will to pursue radical reforms rather than mitigation measures.

First of all, Nigeria should enact a binding law or executive authority that ensures a minimum percentage of domestic crude production for domestic refineries, denominated in Naira to reduce foreign exchange exposure. The Dangote Refinery, regardless of its size and ambitions, cannot fulfill its strategic objectives if it continues to lack demand. IOCs operating in Nigeria should understand that access to Nigerian acreage carries responsibilities for Nigerian supply chains.

Second, the Forward Sales Contract System needs fundamental reform. FSC obligations should be considered as part of the overall raw material production, and a strategic raw material storage system should be established to protect local refiners from the volatility of international markets during times of crisis.

Third, Nigeria should accelerate its energy diversification strategy. The country’s gas reserves, which are among the largest in Africa, remain largely unused for domestic electricity production and industrial raw materials. A strong shift towards gas-to-energy infrastructure, coupled with reduced investment in solar energy, could reduce the structural dependence on liquid fuels that makes Nigeria highly vulnerable to external price shocks.

Fourth, agricultural resilience needs urgent policy support. Fertilizer subsidies and farm input programs should be designed to act as shock absorbers during supply disruptions of exactly the kind witnessed in 2026. Food security and energy security are not separate policy areas, rather, they are, in the modern era of petrochemical-based agriculture, inseparable.

Finally, Nigeria should use its continental weight the head of a spear regional cooperation on alternative petrochemical supply chains. African nations cannot continue to be regular recipients of transmission disruptions from geographic theaters thousands of kilometers away.

Nigeria’s energy crisis at the center of the Hormuz conflict is the cumulative cost of structural contradictions and a resource management system that has consistently prioritized short-term liquidity over long-term independence. The Dangote refinery stands as a reminder of what Nigeria’s industrial aspirations can achieve, and, at the same time, as an indictment of the policy environment that continues to undermine it.

The Middle East will remain volatile. Geoshocks will happen again. The only lasting defense against their consequences is building true energy resilience – built on domestic refining capacity, reformed contracting systems, diversified supply chains, and an agricultural sector resilient to external shocks. Nigeria has resources. The question, as always, is whether it has the will.