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Dangote Refinery to Import US Crude, Signaling Shift in Global Oil Market Dynamics

The Dangote refinery, one of the largest in Africa, is set to import crude oil from the United States, a move that indicates the growing influence of American oil in the global market. According to Bloomberg reports, Trafigura Group has arranged the sale of 2 million barrels of WTI Midland crude oil to the Dangote refinery, with delivery expected by the end of February. This transaction marks the refinery’s first purchase of non-Nigerian crude.

The substantial increase in US oil production over the past decade has significantly altered the landscape of the global oil market, extending its reach to regions like Asia. For Nigeria, a country heavily dependent on petroleum exports, the introduction of US crude into its market is especially notable.

The Dangote refinery, which began operations earlier this month, has a capacity of 650,000 barrels per day. It initially aimed to process 350,000 barrels daily, gradually increasing towards full capacity. The refinery primarily relies on domestic crude, having recently received shipments of Nigeria’s Agbami crude, along with other Nigerian crude streams such as Amenam, Bonny Light, and CJ Blend.

The refinery’s ability to process a variety of crude types, including those from African sources and distant regions like the US and Saudi Arabia, has been highlighted by the Dangote Group. This capability is particularly relevant given Nigeria’s current challenges with crude oil production.

Nigeria has faced a decline in crude oil production due to issues like crude oil theft, divestment by major oil companies, and insecurity in the Niger Delta region. These challenges have led to Nigeria’s failure to meet its OPEC production quota of 1.75 million barrels per day (mbpd) for 2023, prompting OPEC to reduce its production quota for 2024. The erratic levels of Nigeria’s crude oil production have likely influenced the Dangote refinery’s decision to seek more consistent crude oil supplies from international sources like the US.

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