Beyond Hormuz: Nigeria as Africa's Oil Contingency Plan

Africa's Energy Shocks: The Hormuz Crisis

The escalation of the Middle East conflict involving Iran has once again highlighted the strategic importance of the Strait of Hormuz, through which approximately 20% of global oil and LNG trade passes. Maritime insecurity, attacks on energy infrastructure, and rising insurance costs have disrupted energy flows and contributed to renewed volatility in international oil prices.

Although Africa is home to several major crude oil producers, much of the continent remains structurally dependent on imported refined petroleum products. Countries across West, East, and Southern Africa continue to source significant volumes of gasoline, diesel, and jet fuel from Middle Eastern refineries, leaving domestic fuel markets particularly vulnerable to disruptions originating in the Gulf.

Reliance on Middle East Oil and Gas Supplies by Country, IEA 2026

IEA data accordingly show that African economies, led by Eritrea and Madagascar, are among the most reliant globally on Middle Eastern oil imports, followed by other African countries such as Kenya, South Africa, Tanzania, and Namibia. Other major importers, including Morocco, Tunisia, and several West African economies, face higher fuel import bills, increased transport and electricity costs, and renewed inflationary pressures that strain public finances and external balances.¹

Despite its vast crude oil reserves, Nigeria also remains heavily dependent on imported crude for domestic refining. Local crude supply has often been insufficient to meet the demand of domestic refineries, forcing large-scale facilities such as the Dangote Refinery to source feedstock from international markets.²

A History of Fluctuating Oil Production

A retrospective analysis of Nigeria's oil production over the past two decades reveals a complex landscape marked by profound volatility, disruption, and hard-fought recovery between 2020 and 2026. From 2005 onwards, the country experienced a period of strong performance, during which Nigeria consolidated its position as an African energy giant. Crude output averaged between 1.65 million and 2.0 million barrels per day (bpd), supported by international oil majors actively optimizing major onshore assets.³

This level of production fell sharply during the severe crisis between 2020 and 2022, when a combination of pandemic-induced market shocks and industrial-scale pipeline vandalism crippled operational capacity and pushed production down to a historic low of 1.1 million bpd in September 2022.⁴

A gradual resumption of activity took place between 2023 and 2024, characterized by aggressive military intervention, localized private security partnerships, and a shift in investment towards more secure offshore deepwater projects. By mid-2026, these efforts culminated in the recovery of the oil sector, pushing crude oil output to a six-year high of 1.56 million bpd and exceeding its OPEC production quota by 4%.⁵

Home to Africa's Largest Refinery

The recovery of Nigeria's oil industry in 2024 created a more favorable environment for the development of large-scale refining projects. In January 2024, Nigeria officially launched Africa's largest refinery, the Dangote Refinery, located in the Lekki Free Zone near Lagos. Owned by the Dangote Group, a Nigerian multinational conglomerate founded by Aliko Dangote, the refinery has a processing capacity of 650,000 barrels per day (bpd), making it the seventh-largest refinery in the world. It also houses the world's largest single-train crude distillation unit.⁶

Since commencing operations, the refinery has rapidly emerged as an important supplier of refined petroleum products, particularly diesel and jet fuel, to both regional and international markets. In 2025, the United States was the principal export market for the refinery's jet fuel, receiving approximately 14% of its total exports. Europe accounted for a further 23% of export volumes, while substantial quantities were traded through the offshore transshipment hubs of Togo, Guinea, and Angola. ⁷

Its strategic importance grew rapidly following disruptions to Middle Eastern fuel exports, which tightened global supplies and created opportunities for alternative producers. After reaching full commercial operations in February 2026, the refinery significantly expanded exports of gasoline, diesel, and aviation fuel in response to the crisis, strengthening its position as a major source of refined products for global and African markets.

Accordingly, the refinery progressively prioritized exports to African countries seeking to diversify fuel imports away from traditional Middle Eastern suppliers. Initial export destinations included Côte d'Ivoire, Ghana, and Cameroon, while larger import-dependent markets such as South Africa, Kenya, and Tanzania were also considered, given their longstanding reliance on Gulf-based refiners.⁸

In a short period, the refinery has succeeded in establishing an African-based supply network capable of reducing the continent's vulnerability to external supply disruptions, effectively acting as a de facto African contingency mechanism and shielding Nigeria and many African countries from price shocks.⁹ The most persistent challenge to the productive capacity and commercial viability of the refinery remains crude oil supply. The issue remains directly linked to previously discussed national oil production constraints, which continue to compel the refinery to source crude from international markets.¹⁰

In June 2025 alone, imported crude accounted for more than 60% of the refinery's feedstock. Over the course of 2025, crude imports were valued at approximately US$3.74 billion. U.S. crude has increasingly displaced Nigerian feedstock, with imports reaching approximately 590,000 barrels per day.¹¹

Recent data nevertheless point to a remarkable improvement in domestic crude supply to the refinery. Records published in July 2026 indicate that domestic crude represented approximately 78% of the refinery's feedstock in May and June 2026, with Nigerian producers supplying 31.43 million of the 40.40 million barrels processed. Foreign crude consequently accounted for only 22%, representing a marked decline compared with the corresponding period in 2025.¹²

Deeper Political Implications

Beyond the economic weight of the refinery, the scale of its investment creates significant political implications in the short and long term for Nigeria and the African continent as a whole. The high production capacity of the refinery, reaching 700,000 bpd at its peak, has positioned it as the seventh-largest refinery in the world, supported by an expansion plan to increase capacity to 1.4 million barrels per day by 2028.¹³

This scaling-up of production not only serves commercial purposes but also acts as a reinforcing factor in Nigeria's economic leadership in Africa, as the continent's third-largest economy in 2025,¹⁴ and its energy leadership as Africa's largest crude oil producer.¹⁵

The most significant political implication of the establishment of the Dangote refinery is linked to the gradual dismantling of Africa's historical dependence on energy imports. To date, Africa still refines only around 30% of its crude oil locally, resulting in an estimated $25 billion in annual fuel imports.

With the beginning of the refinery's operations in 2024, Nigeria's fuel import bill fell sharply, dropping from $2.6 billion in the first quarter of 2024 to $1.2 billion during the same period in 2025, a 54% decline in a single year. By the end of 2025, the refinery was producing more than 45 million liters of petrol and 25 million liters of diesel each day, exceeding domestic demand and enabling exports across Africa.¹⁶

This impact was notably felt in the European energy market. European imports of Nigerian crude oil declined significantly due to increased domestic absorption by the refinery since it came online in January 2024, with more Nigerian cargoes retained in the country for domestic processing.¹⁷

The refinery is thus disrupting the long-standing dependency model under which African crude oil was refined abroad and sold back to the continent at a higher cost, doing so on a scale unmatched by previous refining initiatives. It is thereby allowing Nigeria to process more of its oil domestically, sharply reducing fuel imports, conserving foreign reserves, and meeting national demand.

Its impact extends beyond Nigeria and has broader significance for continental industrial sovereignty: Africa can move beyond raw-material exports, retain more value locally, reduce annual import losses, complete the oil value chain, and reshape its position in global energy markets.

Prioritizing demand from African countries also contributes to continental economic integration, translating the objectives of the AfCFTA into tangible outcomes through interconnected infrastructure and expanded intra-African trade.

A Promising Future for African Refining

The inauguration of the Dangote Refinery is ushering in a promising new era for Africa's refining industry. The refinery's commercial performance is already demonstrating the high global competitiveness that African refining assets can achieve. In June 2026, Nigeria exported approximately 466,000 metric tons (MT) of aviation fuel to Europe, almost twice the May volume, surpassing the United States and thereby becoming Europe's largest external supplier of jet fuel.¹⁸

Dangote is also looking beyond West Africa. The group is planning a second mega-refinery in East Africa and has selected Lamu Island, off the Kenyan coast, as the proposed site. The facility could process approximately 650,000-700,000 barrels per day and cost between $15 billion and $17 billion. It is expected to be Africa's second-largest refinery. Combined with plans to expand the Lagos refinery from 650,000 to 1.4 million barrels per day, the addition of an East African facility would establish a pan-African refining network capable of serving markets across West, Central, East, and North Africa.¹⁹ If implemented successfully, this strategy could position Africa not merely as a supplier of crude oil, but as an increasingly influential producer and exporter of refined energy products.

African financial institutions are also playing an important role in facilitating the refinery's expansion. By April 2026, Afreximbank had reportedly underwritten $2.5 billion of a $4 billion syndicated term loan intended to support the refinery's expansion and increase its capacity from 650,000 barrels per day (bpd) to 1.4 million bpd by 2030.

Such financing is strategically important because it demonstrates the continent's growing ability to fund large-scale industrial projects through its own financial institutions. Afreximbank's involvement can reduce dependence on external lenders, strengthen financial sovereignty, and attract additional private capital. The arrangement could also serve as a model for financing future refineries, petrochemical facilities, and energy infrastructure projects across the continent.²⁰

The refinery's expansion is also being supported by private capital markets. Dangote Refinery completed a $2.5 billion private equity placement, the first opening of the company's capital to external investors. The offering was reportedly oversubscribed 3.7 times and attracted major African and international investors, including Africa Finance Corporation and India Infra Buildco, an investment vehicle backed by Afreximbank.²¹

Opportunities for Morocco's Aviation Market

For Morocco, the Dangote refinery represents an alternative regional supplier of refined petroleum products that could enhance supply diversification beyond traditional suppliers, which include Saudi Arabia, Spain, Russia, and the United States. Access to a large-scale refinery on Africa's Atlantic seaboard could strengthen Morocco's energy security by adding a proximate regional source of refined petroleum products to its existing network of suppliers.

Compared with deliveries from the Gulf or the United States, Nigerian supply would shorten maritime routes, reduce transport-related exposure, and provide greater flexibility during periods of international market disruption, such as the Strait of Hormuz crisis.

In fact, recent reports on the Dangote Refinery's export program indicate that Morocco has expanded its sourcing of jet fuel to include supplies from the refinery, receiving 84,000 MT of Aviation Turbine Kerosene (ATK) through two Unipec cargoes between May and June 2026.²² The increased availability of competitively priced regional supply can enhance market competition and improve the resilience and cost-efficiency of Morocco's aviation fuel supply chain.

Over the medium term, the expansion of African refining capacity may represent a strategic opportunity rather than an immediate commercial alternative. The steady expansion of continental refining capacity presents a significant opportunity for the Moroccan aviation market, which has been experiencing unprecedented growth since 2024.

This growth has been driven by the rapid development of the national aerospace industry, rising passenger demand, and major airport infrastructure upgrades ahead of the 2030 FIFA World Cup. In July 2026, Morocco ranked as Africa's third-largest aviation market, with approximately 2.18 million scheduled air seats.

This trend is likely to continue as Morocco implements its Airports 2030 strategy, which aims to increase national airport capacity to 80 million passengers annually. Royal Air Maroc's parallel fleet expansion, from 66 aircraft in mid-2026 to around 100 by 2030 and 200 by 2037, will further increase the country's structural exposure to jet-fuel availability and international price volatility. ²³

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Notes

1. International Energy Agency. “Reliance on Middle East Oil and Gas Supplies by Country.” Last updated April 28, 2026. ↑
2. Kingsley Jeremiah, “Nigeria Fails Oil Production Targets, Records $3.6b Loss for 2026 Budget,” The Guardian Nigeria, June 12, 2026. ↑
3. CEIC Data, “Nigeria Crude Oil: Production, 2002–2026,” accessed July 22, 2026. ↑
4. African Energy Chamber, “We Need to Talk About Africa's Energy Crisis: Why Is Production Waning?” January 20, 2022. ↑
5. Pétrole : le Nigeria a produit plus que son quota Opep, L'Agence d'Information, July 2026. ↑
6. Dangote Petroleum Refinery, “About Dangote Refinery,” accessed July 23, 2026, ↑
7. Claudia Carpenter and Kelly Norways, “Nigeria's Dangote Takes Spotlight as Gulf Distillate Exports Plunge: Refinery CEO,” S&P Global Energy, March 10, 2026. ↑
8. MacDonald Dzirutwe, “Nigeria's Dangote Refinery Boosts Exports to Ease Africa's Supply Crunch,” Reuters, April 6, 2026 ↑
9. Udeme Akpan, “Dangote Refinery Shields Nigerians from Global Fuel Price Shock-S&P,” Vanguard News, July 15, 2026. ↑
10. Nouridin Melo, “The Dangote Refinery and the End of Africa's Engineered Dependency,” African Arguments, May 27, 2026. ↑
11. Victoria Grabenwöger, “US Crude Overtakes Nigerian Barrels in Dangote's Import Mix,” Kpler, August 6, 2025. ↑
12. “Dangote Sourced 22% of June Crude from Overseas—Report,” TradeFM, July 2026. ↑
13. “Nigeria's Dangote Refinery Tops 700,000 Barrels a Day in Test,” Reuters, June 4, 2026. ↑
14. Worldometer, “GDP by Country,” accessed July 22, 2026. ↑
15. Danco Group, “Top 5 African Countries That Produced Most Oil in January 2025,” February 2025. ↑
16. Nouridin Melo, “The Dangote Refinery and the End of Africa's Engineered Dependency,” African Arguments, May 27, 2026. ↑
17. Charlie Mitchell, Kelly Norways, and George Delaney, “Dangote Impact Felt in Global Oil Markets Six Months after Launch,” S&P Global Commodity Insights, August 1, 2024. ↑
18. Solomon Ekanem, “Nigeria Overtakes U.S. as Europe’s Top Jet Fuel Supplier with 466,000-Tonne June Exports,” Business Insider Africa, July 6, 2026. ↑
19. Sertan Sanderson, “Kenya: What Dangote’s New Refinery Means for East Africa,” News24, July 14, 2026. ↑
20. African Export-Import Bank, “Afreximbank Supports Dangote Group as It Targets US$100 Billion Annual Revenue by 2030,” April 8, 2026. ↑
21. “Dangote lève 2,5 milliards de dollars et vise la première place mondiale,” Jeune Afrique, July 24, 2026, https://www.jeuneafrique.com/1826628/economie-entreprises/dangote-leve-25-milliards-de-dollars-et-vise-la-premiere-place-mondiale/. ↑
22. Samuel Suraju, “Dangote Refinery Exports 476,099 MT of Jet Fuel across Two Continents in May,” Petroleumprice.ng, June 5, 2026. ↑
23. OAG, "African Aviation Market Data," accessed July 22, 2026. ↑