For Nigeria, Africa’s largest oil producer and one of its most densely populated nations, the closure of the Strait of Hormuz in early 2026 exposed fault lines that politicians and technocrats have long preferred to ignore.
The Strait of Hormuz is one of the most consequential waterways on earth. Roughly 21 kilometers wide at its narrowest point, it channels nearly 20% of the world’s oil trade, functioning as the jugular vein of the global hydrocarbon economy.
By Adamu B. Garba II, Executive Chairman of IPI Group Limited, Nigerian 2019/2023 presidential aspirant
When that artery constricted in March 2026, Brent crude prices surged past $114 per barrel, the highest since 2022, in a matter of days.
Beyond crude oil, the closure disrupted the flow of petrochemicals and fertilizers, commodities for which the Gulf region is among the world’s foremost exporters.
As UNCTAD observed, the disruption deepened global economic strain across trade, prices, and finance, threatening the food security of import-dependent nations from sub-Saharan Africa to South Asia.
Nigeria was firmly in that cross-hair.
Why can’t Nigeria refine its own oil?
There is a bitter irony at the heart of Nigeria’s energy story.
A nation that sits atop some of the world’s richest hydrocarbon deposits has, for decades, been unable to refine sufficient fuel for its own population.
Nigerians have paid the price of this structural contradiction through repeated fuel scarcity, suffocating queues at filling stations, and an economy perpetually held hostage by the price of imported refined petroleum products.
The Hormuz crisis simply stripped away whatever thin insulation of normalcy had accumulated over the years.
The commissioning of the Dangote Refinery in 2024 was initially viewed as a transformational moment.
With a starting capacity of 650,000 barrels per day and ambitions to expand to 1.4 million barrels daily, the refinery was positioned as a declaration of industrial sovereignty.
Yet according to the article, the refinery’s promise has been undermined by a deeper structural contradiction.
Nigeria’s crude oil, extracted domestically, continues being exported to global spot markets while domestic refineries struggle to secure stable supply.
The article states the Dangote Refinery has even been forced to import crude from the United States and other African countries.
“The paradox is acute: Nigeria cannot feed its own refinery because its crude is pledged, at discounted prices, to foreign competitors.”
Fuel prices surged during Hormuz disruption
As global crude prices spiked above $114 per barrel, Nigerian fuel prices reportedly surged from ₦870 to ₦1,300 per litre during March 2026.
Although prices later eased somewhat after market conditions stabilised, the article argues the episode demonstrated how exposed Nigerian consumers remain to global energy volatility.
For many Nigerians dependent on informal transport, agriculture and small-scale trading, the rapid rise in fuel prices created severe economic stress.
Forward sales contracts trapping Nigerian supply
One of the article’s central arguments concerns Nigeria’s use of Forward Sales Contracts (FSCs).
According to the report, these agreements allow the Nigerian National Petroleum Company (NNPC) to receive upfront financing by pledging future crude production to foreign buyers.
The article claims the long-term effect has been a structural loss of energy sovereignty.
Instead of benefiting from rising global oil prices during crises, Nigeria remains contractually locked into lower-priced export agreements.
By 2025, FSC obligations had reportedly risen to ₦8.07 trillion ($6 billion).
The article argues this has diverted crude supply away from domestic refining capacity while worsening fuel shortages inside Nigeria itself.
Inflation and food security pressures growing
The Hormuz disruption also triggered broader economic consequences across Nigeria.
According to the article:
- Inflation has risen above 30%
- Transportation costs have surged
- Fertilizer shortages have intensified
- Agricultural production costs have increased
- Smallholder farmers are facing growing pressure
The report argues food security and energy security are now deeply interconnected due to modern agriculture’s dependence on petrochemicals and fuel supply chains.
Calls for structural reform
The article argues the crisis is reversible, but only through significant structural reform.
Among the proposed solutions are:
- Mandatory domestic crude allocations for Nigerian refineries
- Reform of Forward Sales Contract systems
- Creation of strategic crude reserves
- Expansion of gas-to-power infrastructure
- Greater investment in solar energy
- Agricultural shock protection mechanisms
- Regional African petrochemical cooperation
The article concludes that Nigeria’s ongoing vulnerability reflects decades of prioritising short-term liquidity over long-term national energy sovereignty.
“Nigeria has the resources. The question, as it has always been, is whether it has the will.”
Source: RT / Adamu B. Garba II