Crude Oil Offtake Stalls in Nigeria as Pricing Gaps Disrupt Local Refinery Supply Chain

Nigeria’s domestic refining sector is facing a major supply challenge as over 40.2 million barrels of crude oil made available by international and independent producers were not taken up by local refiners, including the Dangote Refinery. The Nigerian National Petroleum Company Limited (NNPCL) disclosed the development, highlighting growing inefficiencies in the crude allocation system.

According to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), producers offered about 68.7 million barrels of crude in the first quarter of 2026, but only 28.5 million barrels were actually converted into supply. This represents a delivery rate of roughly 36 percent, despite a mandated allocation of 61.9 million barrels under the Petroleum Industry Act (PIA).

The regulator attributed the shortfall to pricing disagreements between crude producers and domestic refineries, noting that transactions operate on a “willing buyer, willing seller” basis. This pricing gap has become a key bottleneck, slowing down crude uptake and limiting refinery operations across the country.

Meanwhile, concerns are also rising over global oil market stability. The Chartered Risk Management Institute of Nigeria warned that the exit of the United Arab Emirates from OPEC could trigger volatility in crude prices and disrupt coordination among oil-producing nations, with possible knock-on effects for Nigeria’s economy and revenue planning.

At the same time, debate continues over Nigeria’s refinery strategy. While the Federal Government pushes ahead with new partnerships, including Chinese firms for the rehabilitation of the Port Harcourt and Warri refineries, critics question the transparency and value of repeated investments. Some experts argue for new modern refineries instead of continued rehabilitation, while others maintain that functional local refineries remain key to energy security, job creation, and long-term economic stability.