NNPC’s Suspension of Crude Supply to Dangote Refinery Impacts OPEC Output

The Nigerian National Petroleum Company (NNPC) Limited’s recent suspension of crude oil deliveries to the Dangote Refinery has significantly influenced Nigeria’s oil production figures, contributing to a decline in the Organization of the Petroleum Exporting Countries’ (OPEC) overall output.

Background of the Suspension

In October 2024, NNPC initiated a naira-for-crude arrangement, allowing local refiners, including the Dangote Refinery, to purchase crude oil using the Nigerian naira instead of U.S. dollars. This initiative aimed to bolster domestic refining capacity and reduce reliance on imported petroleum products. However, by March 2025, NNPC suspended this arrangement, citing prior commitments of its crude oil production to forward contracts, which left insufficient supply for domestic refineries. This suspension has raised concerns about potential increases in petrol prices and the stability of Nigeria’s energy sector.

Impact on OPEC Output

According to a Reuters survey, OPEC’s oil production in March 2025 declined by 110,000 barrels per day (bpd) to 26.63 million bpd. Notably, Nigeria’s output decreased by 50,000 bpd, primarily due to reduced deliveries to the Dangote Refinery. This reduction offset the country’s increased exports, highlighting the significant role domestic refining plays in national production figures.

Dangote Refinery’s Response

The Dangote Refinery, with a capacity of 650,000 bpd, has been pivotal in Nigeria’s strategy to achieve energy self-sufficiency. Following the suspension, the refinery announced a temporary halt on fuel sales in the local currency, attributing the decision to a mismatch between sales proceeds in naira and crude purchase obligations in dollars. This move underscores the financial challenges posed by the suspension and its potential ripple effects on the domestic fuel market.

Broader Implications

The suspension’s impact extends beyond domestic concerns, affecting Nigeria’s contributions to OPEC’s collective output and potentially influencing global oil prices. As Nigeria grapples with balancing domestic refining needs and international commitments, the situation underscores the complexities of managing national resources in a globally interconnected market.

In summary, NNPC’s suspension of crude supply to the Dangote Refinery has not only affected domestic fuel production but has also contributed to a notable decline in OPEC’s overall output, reflecting the intricate interplay between national policies and global oil dynamics.