Nigeria’s energy landscape is currently undergoing a reform, and perhaps, its most profound transformation in decades. After so many years of costly fuel importations and frequent shortages, the introduction of the Dangote Refinery appears poised to adjust the domestic fuel market, improve fuel independence and shield Nigeria from the worst effects of global crude price swings in 2026.
Since 2023, the refinery, which has been launched in phases, was envisioned as an infrastructure which has the capacity to end Nigeria’s long dependence on petrol importation.
Heading into 2026, the influence that the Dangote Refinery now has on market dynamics has been nothing but profound, despite the many challenges it has dealt with.
Fuel Prices: A New Dynamic in an Old Problem
Nigeria has suffered decades of being a huge refined fuel importer, even though it stood as a major crude exporter. Being import dependent costs the country billions in foreign exchange and leaves it vulnerable to global supply disruptions.
Perennial fuel scarcity and unpredictable prices were constant factors in the sector. The story seems to have changed since the entry of Dangote Refinery in the oil sector.
In 2025 alone, the refinery has effected several price slashes, lowering gantry prices all the way down to now N669 per litre in December.
These have had a significant effect on the pump prices of petrol at filling stations, a notable development in a market where prices previously exceeded N1,000 per litre.
Apart from a temporary relief to customers, the price adjustments by Dangote Refinery demonstrated how operational refineries in Nigeria could apply downward pressure on prices by overcoming the challenges of import-related costs and certain inefficiencies.
Supply Signals: Meeting Demand with Domestic Output
The Dangote Refinery has insisted that its production level is now capable of meeting the needs of Nigeria. Officials at the refinery claim daily petrol loading levels were topping 45 million litres, a figure that reportedly surpasses Nigeria’s average daily petrol demand.
As part of efforts to head off holiday season scarcity, the refinery disclosed its readiness to deliver 1.5 billion litres of petrol per month in December and January, with output rising to 1.7 billion litres monthly from February 2026 onward.
However, the situation is not completely stable. Independent reports show that fuel supply from Dangote and other local producers went up and down in late 2025. In some months, supply fell below the level needed, making it necessary to bring in extra fuel from abroad.
This shows that although local refining has reduced Nigeria’s reliance on imports, the country’s fuel supply system is still adjusting and is not yet fully independent.
2026 Outlook: Expansion and Market Impact
Looking ahead to 2026, a major development is Dangote’s plan to increase the refinery’s capacity. Aliko Dangote himself stated that the plant could raise its processing level to about 1.4 million barrels per day in the coming years, more than double its current output.
If this expansion happens as planned, it could greatly change fuel supply in Nigeria and nearby countries. The higher output would allow Nigeria to fully meet its own petrol needs and also export refined fuel. This could help earn foreign currency, support the naira, and strengthen the wider economy.
In addition, greater capacity could reduce the sharp price changes often caused by seasonal increases in fuel demand. This would make fuel prices more stable, which is important for government planning and business decisions.
Challenges: Supply Logistics, Policy and Currency Pressures
Despite the gains, some challenges could limit the refinery’s impact in 2026.
1. Crude Supply Issues: Dangote has warned that irregular crude supply makes it hard to run at full capacity. In late 2025, this led to a temporary halt in naira petrol sales, increasing pressure on dollar demand. This shows that local refining needs a steady crude supply to succeed.
2. Operational Disruptions: Earlier in 2025, equipment problems reduced fuel output and forced some stations to rely on imports. Routine maintenance and transport delays are likely to continue and will need careful management.
3. Regulation and Market Alignment: Fuel prices and availability will depend on how Dangote’s pricing fits with government policies on imports and local refining. Clear rules and strong coordination will be key to stable pricing in 2026.
Consumer Impact and Broader Economic Ripples
For everyday Nigerians, the expectation is that a steady local fuel supply and fair pricing will make petrol more affordable and reduce long queues at filling stations. This would be a big change from past fuel shortages. Some civil society groups have already welcomed the refinery’s role in lowering fuel prices and reducing pressure on foreign exchange.
For businesses, stable fuel prices make it easier to plan costs. Transport companies and manufacturers benefit when fuel costs are more predictable. At the national level, relying less on fuel imports can improve trade balance and reduce strain on foreign currency reserves.
Conclusion: Cautious but Positive Outlook
As Nigeria enters 2026, the Dangote Refinery remains a key driver of change in the fuel market. Its large local petrol production has already reduced the need for imports and helped push prices down.
If the planned expansion goes ahead and cooperation with government and industry continues, the refinery could further improve fuel supply and price stability.
However, long-term success will depend on fixing issues such as steady crude supply, smooth operations, and clear regulations. If these challenges are addressed, Nigeria could finally achieve a stable and self-sufficient petrol market, bringing real benefits to both citizens and the wider economy.
By: Victor Enengedi — Head of Business Desk, Legit.ng