The Centre for the Promotion of Private Enterprise (CPPE) has cautioned that the emergence of domestic refining capacity will not automatically insulate Nigeria from fluctuations in global fuel prices.
In a statement issued on Monday, March 9, 2026, the founder of the CPPE, Dr. Muda Yusuf, explained that because crude oil remains the primary feedstock for refineries, its pricing is inherently tied to international benchmarks, regardless of where the refining occurs.
The clarification follows mounting public debate regarding the role of local refineries in stabilizing Nigeria’s energy market amid rising geopolitical tensions in the Middle East.
As crude oil prices climb toward 100 dollars per barrel, there has been a widespread expectation among Nigerians that domestic refining should yield significantly cheaper fuel. Dr. Yusuf noted, however, that the economics of the industry do not support this assumption.
According to Dr. Yusuf, crude oil supplied to refineries, even when sourced locally, is priced using international benchmarks and denominated in United States dollars. Furthermore, domestic refineries often pay a premium of between three and six dollars per barrel to secure supply. Because these feedstock costs are globally indexed, any upward movement in international crude prices is inevitably transmitted to domestic fuel costs, including Premium Motor Spirit (PMS), diesel, and aviation fuel.
Despite this lack of complete insulation, Dr. Yusuf emphasized that domestic refining offers significant economic advantages.
He stated that local operations reduce the heavy logistics, freight, insurance, and port handling costs associated with fuel imports, which often surge during periods of global supply chain disruption.
Beyond price stabilization, Dr. Yusuf highlighted that domestic refining strengthens Nigeria’s energy security by reducing the country’s historical vulnerability to supply shocks.
He added that the sector creates critical industrial linkages, providing feedstock for petrochemicals, fertilizers, and plastics, while also easing pressure on foreign exchange management.
To maximize these benefits, the CPPE urged the government to prioritize reliable crude supply arrangements, improve petroleum distribution infrastructure, and enact policies that promote export competitiveness for refined products.
While domestic refining cannot eliminate the impact of global volatility, Dr. Yusuf concluded that it remains essential for reducing supply disruption risks and fostering long-term macroeconomic stability.