The renewed hostilities between the United States and Iran over the strategic Strait of Hormuz, have triggered fresh concerns across global energy markets, with indications that Nigeria’s Dangote Petroleum Refinery has resorted to dollar-denominated transactions effective today.
This followed the persistent failure of the Nigerian National Petroleum Company Limited (NNPCL) and International Oil Companies (IOCs) to meet local supply obligations, requiring domestic crude to be sold to the refinery in naira.
The result is that the refinery has had to import fuel at higher dollar prices.
Under the crude-for-naira deal, the refinery was to be supplied 15 cargoes a month. However, they barely meet up to five cargoes, resulting in having to import at high dollar prices.
The situation has been made worse by Nigerian Midstream and Dowstream Petroleum Regulatory Authority (NMDPRA)’s issuance of fresh import licences to marketers, putting a strain on the dollar exchange rate, which at the weekend, fell to $1 to N1450, and further putting pressure on Dangote’s import bills at higher exchange rate.
The latest escalation in the US-Iran war came after the United States launched another round of strikes on Iranian targets early Sunday, extending a pattern of military exchanges that have steadily eroded the fragile ceasefire reached between both countries last month.
According to reports, the strikes were aimed at degrading Iran’s capacity to threaten commercial shipping routes through the Strait of Hormuz, one of the world’s most critical energy corridors.
The development has once again placed global oil markets on edge, given that the Strait of Hormuz serves as a vital transit route for a significant share of the world’s crude oil exports.
Any disruption to shipping activities in the waterway has historically translated into higher energy prices and increased market uncertainty.
For Nigeria, the implications might extend far beyond international diplomacy.
Industry sources said the renewed instability in the Gulf region could complicate crude procurement arrangements for the Dangote Refinery, especially at a time concerns persisted over domestic crude supply commitments.
Should the refinery increasingly turn to imported crude feedstock to sustain operations, the attendant foreign exchange exposure might compel a shift toward dollar-based pricing mechanisms for refined petroleum products.
The development would represent a major setback for efforts aimed at reducing pressure on Nigeria’s foreign exchange market through local refining and the federal government’s crude-for-naira initiative.
The United States military confirmed that it carried out a second wave of attacks within hours after accusing Iran of targeting commercial vessels transiting the Strait of Hormuz. U.S. Central Command said the operations were intended to prevent further attacks on international shipping.
Iranian state media, however, reported that the American strikes extended beyond the Strait of Hormuz region and hit several locations across central and western Iran.
Among the locations reportedly targeted were Ahvaz and Khondab, while authorities in Khuzestan Province confirmed strikes in Omidieh, Mahshahr, Behbahan, Dezful, Andimeshk and Abadan.
