By Lekan Sote
If Nigeria has strategic reserves of petroleum products, it is not evident, though Google says that in 2025, Nigerian petroleum reserves, second in Africa after Libya, and 11th in the world, were 37.5 billion barrels.
So, Nigeria’s strategic reserve is still in the soil, not readily available as petroleum products waiting to be discharged into the market to stem shortages due to emergencies of war or natural disasters. It is not even ready for conversion to petroleum products.
That is why the diplomatic feints that became a war between Iran, America and Israel made Dangote Refinery and Petrochemical Company, which had been reducing the price of its petrol, make a U-turn and raise its prices.
There was howbeit, a high inventory of imported fuel held by importers because of the prevailing prices of Dangote Refinery, which didn’t incur landing charges and didn’t buy foreign exchange, but paid naira, for the petroleum it got from the Nigeria National Petroleum Company Limited.
Aliko Dangote, President of Dangote chaebol, revealed that his refinery was importing petroleum from foreign suppliers, like America. NNPCL hasn’t been too faithful to the directive of President Bola Tinubu to supply petroleum to Dangote Refinery for naira.
Anyway, the importers had to wait until the Middle East War of the 20th century broke out and a legitimate opportunity to sell their products at a higher price presented itself. If this war hadn’t broken out, they’d have eventually sold their inventory at a loss.
The increase in the price of petrol by Dangote Refinery amply demonstrated Nigeria’s lack of strategic petroleum and petroleum products reserves. If Nigeria had a strategic reserve, the government would have swiftly released it into the market.
And the price of the products would have remained the same or slightly higher, but not as drastic as it did just a few days after the war broke out on 28th February 2026. The lack of strategic reserves makes Nigeria’s petroleum market very vulnerable.
While Dangote Refinery could guarantee a near regular supply of petroleum products for Nigerians in the face of the current Middle East war, it had no armour against the hike in the price of fuel that was caused by the war.
Petroleum products marketers must have felt the need to adopt the Last In, First Out or Cost of Replacement Cost Methods, instead of First In, First Out or Weighted Average, to fix appropriate prices for their products. While some might think this is a ploy for excessive profit, it is actually an intelligent way to recover costs.
Federal Competition and Consumer Protection Commission’s effete intervention into the sudden increase in petrol price, and Nigerian Midstream and Downstream Regulatory Authority, which went on audio silence, confirm that Nigeria has no strategic fuel reserves.
The failure of the regulatory agencies to live up to their statutory responsibility is a negative testimony of how the Nigerian government, that is a continuum by the way, consistently fails Nigerians with inept or absent policies.
When the petrol for which NMDPRA granted six emergency import permits arrives, the war may have ended, and Nigerians would have paid the higher price it caused. This also shows that the local refineries cannot meet Nigeria’s demand for petrol.
Wale Edun, Minister of Finance and Coordinating Minister of the Economy, has wisely rejected price control and offered that the government would “look at other measures,” including 100,000 extra CNG kits and maybe strategic reserves.
A strategic reserve is a buffer inventory of petroleum products, or crude petroleum, stockpiled to help mitigate a sudden rise in petroleum prices whenever there is a crisis, such as the Iranian, American and Israeli war that just broke out.
Governments usually release strategic reserves into the market to depress rising prices of products. America’s strategic reserve is held and operated by the Department of Energy in a network of sites between Texas and Louisiana.
However, Dangote and NNPCL swiftly reduced the price of their petrol almost as soon as the hitherto rising price of Brent crude petroleum slumped from above $100 to $89, and WTI crude petroleum tanked from $119.50 to $87 because it looked as if the conflict in the Middle East was easing off.
A nameless intern made a goofy claim on behalf of the office of Chris Wright, America’s Secretary of Energy, that an oil tanker was successfully escorted by the US Navy through the Strait of Hormuz that Iran had kept under tight security with mines.
It got 4,700 retweets and one million views before it was discovered that the claim was false. More than 700 oil tankers remain in an immobile queue as 31 autonomous commands of Iran’s Islamic Revolutionary Guard Corps continue to fire shots without ceasing.
The Strait of Hormuz is significant for the world’s crude petroleum market because it is “the world’s most important energy logistics choke point through which more than 20 million barrels, or 20 to 30 per cent, of the world’s consumption of crude petroleum passes daily”.
It is the primary, indispensable and only sea route for the passage of petroleum, liquified natural gas and fertiliser from Gulf oil states, like Saudi Arabia, UAE, Kuwait, Iran, and Iraq, into the economies of China, South Korea, India and Japan that depend on the commodities.
Another reason for the sudden drop in the price of petroleum is the speculation that supply would rise, because eight members of the Organisation of Petroleum Exporting Countries announced plans to raise crude petroleum production (by a relatively insignificant 206,000 barrels per day) from April 2026.
Nigeria, an oil-producing country, is suffering from the shocks of war in the Gulf region because NNPCL, which is unable to run its own refineries, is also unable to maintain its 21 depots with approximately 2.14 million cubic metres. Though they are currently being rehabilitated by NNPCL, there is a logistical constraint in the dilapidated pipelines.
If Nigeria had a reasonable level of strategic reserves, the Economic Management Team, led by Edun, wouldn’t have been in panic mode, dreading a rise in inflation, capital flight and disruption to trade logistics.
The team would have simply asked the Minister of State for Petroleum Resources to order NNPCL to open the taps of the strategic reserves and move petroleum products into the market. Both the vendors of the products and the consuming public would have been relieved now.
Instead of showing up in a big way, the government is making speeches. The Yoruba would pray that where money should be spent, one should not “spend mouth”. Regrettably, it is too late for the government to react appropriately.
The economic management team should tell Fola Adeola’s Presidential Task Force on Petroleum Reform and Value Optimisation to add strategic reserves to its considerations. The government cannot always be acting as if it were helpless when it should move swiftly to address existential issues that confront Nigerians.
Edun, who has been trying his best so far, should realise that this is not about the 4.07 per cent economic growth recorded in the last quarter of 2025. It is about being proactive and planning for the future comfort of Nigerians.
As the Petroleum Products Retail Outlets Owners Association of Nigeria (mischievously?) endorses Dangote Refinery to supply 100 per cent of Nigeria’s petrol, the government must plan for future strategic reserves.
X:@lekansote1, lekansote.com
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