The gasoline price puzzle: Why doesn't the global drop in oil prices reflect on the consumer?

Written by Omnia Hassan

Dangote Refinery, Africa's largest oil refinery, has settled the recurring debate about why gasoline prices haven't directly decreased with the fall in global oil prices. It has confirmed that fuel prices are tied to the cost of purchasing crude oil weeks or even months ago, not to immediate international market prices.

The refinery revealed that it spent approximately $4.48 billion to import 40.4 million barrels of crude oil during May and June 2026, as part of supply contracts that were concluded before the recent drop in crude oil prices.

Gradual decrease in crude oil cost

Data from the refinery showed that the average cost of a barrel of imported oil fell from $124.8 in May to $95.25 in June, a decrease of approximately 24%, as a result of falling global prices, lower shipping costs, and a change in the mix of imported crudes.

Despite this decline, the company clarified that the fuel currently on the market is still produced from inventories purchased at high prices, which delays the reflection of falling oil prices on gasoline prices for consumers.

Diversifying supply sources

The refinery adopted a broad strategy to diversify crude oil sources, importing oil from Nigerian fields such as Bonny Light, Forcados, and Escravos, along with crude from Libya, Angola, and other countries. It also received its first shipments of Emirati crude oil, a move that enhances supply flexibility and supports the stability of its operational processes.

A pivotal role in energy security

The refinery confirmed that part of the increase in the cost of crude oil was not fully passed on to consumers, in an effort to limit inflationary pressures and maintain stability in Nigeria's fuel market.

Furthermore, according to the company, domestic refining has contributed to reducing reliance on imported petroleum derivatives, supporting energy security, and easing pressure on foreign exchange reserves, representing a strategic shift for Africa's largest crude oil producer.

Will prices drop soon?

Dangote Refinery believes that the continued drop in global oil prices will give consumers an opportunity to benefit from new fuel price reductions in the coming period, as cheaper crude oil shipments gradually enter the production cycle, which could be reflected in gasoline prices if global energy market conditions remain stable.