Nigerian refined products demand is falling as a result of the US-Iran war and its effects on road fuel prices such as gasoline, according to local sources.
The country's 650,000 b/d Dangote refinery lowered its asking price for gasoline loaded at its gantries to N1,296/litre (l) on Monday, down from N1,300/l on 22 March, according to local fuel brokers. But levels this week are up considerably from just N800/l only a month ago.
"[I am] expecting lowered demand, we are now [seeing] … about [a] 40pc increase in retail prices," one Nigerian gasoline trader said. "[I am] yet to see any hint or likelihood of shortage."
On Tuesday no local buying interest has emerged for gasoline loading from Dangote's offshore SPMs, a source with knowledge of the matter said. No gasoline cargoes have loaded from the refinery for local delivery since 19 March, according to Kpler tracking data.
Despite lower local demand, oil product supply does not appear in jeopardy, according to sources. Dangote run rates "are reportedly steady at 650,000 b/d, so local supply [is] holding," the Nigerian gasoline trader said.
Elevated oil product imports in December have also helped counter any supply tightness, one trader said. And a steep cut in Dangote asking prices for its products over Christmas caused product holders to sit on their stocks to wait out Dangote's Christmas discount, another trader said, which "has benefited stock levels".
No fuel shortages were being recorded at this time, according to sources. "However, [the] lack of SPR (strategic petroleum reserves) has made the government unable to influence the market," one local trader said. "Therefore, the masses have been left to face market forces."
Softer local demand is yet to translate into lower local gasoline imports, however. This may prove to be a potential boon for European gasoline traders who have faced difficulty placing cargoes east of Suez due to higher freight costs, and as the transatlantic arbitrage remained firmly closed in recent sessions, according to Argus calculations.
Nigeria has imported 64,000 b/d of gasoline to date this month, according to Kpler, up from 50,000 b/d in January — a record low. And the upside for higher import volumes remains as the downstream authority NMDPRA issued 110,000t worth of gasoline import permits on 11-12 March, which could be well timed to balance national gasoline balances after Dangote restarted gasoline exports last week.
