In recent months, a significant shift has occurred in the dynamics of crude oil trade between the United States and Nigeria, underlining the changing landscape of global energy supplies and demands. This change has been primarily driven by a convergence of factors on both sides of the Atlantic, leading to a fascinating development where the U.S. has emerged as a net exporter of crude oil to Nigeria, an OPEC member nation, during February and March of 2025.
The backdrop to this development is multifaceted. On the American front, a decrease in domestic refinery demand coupled with certain supply imbalances has prompted a pivot towards external markets. Particularly noteworthy is the impact of routine maintenance at a Phillips 66 refinery located in New Jersey. This maintenance work, conducted in the early months of the year and concluding in April, temporarily dampened domestic demand for crude, thereby enabling an increase in crude oil exports.
Concurrently, Nigeria has been navigating its own set of challenges and opportunities in the oil sector. The nation’s struggle to significantly enhance its domestic crude production has been a persistent issue. This situation took a notable turn with the commencement of operations at the new Dangote refinery, a colossal 650,000 barrels per day (bpd) facility envisioned by Aliko Dangote, Africa’s wealthiest individual. The refinery’s arrival on the scene was timely, although it quickly encountered hurdles related to insufficient local crude supplies, prompting it to look abroad to bridge the gap.
An intriguing aspect of this development is the Dangote refinery’s procurement strategy, particularly its preference for West Texas Intermediate (WTI) crude from the U.S. It’s reported that by June, WTI crude constituted a third of the refinery’s feedstock, a decision heavily influenced by WTI’s superior gasoline blending qualities. These qualities, such as yielding higher volumes of reformate—a key gasoline blending component—are technical advantages that make WTI an attractive option for refineries focused on optimizing their gasoline production.
The broader implications of this shift are significant. Nigeria, despite being Africa’s top crude oil producer, has been reliant on imported fuel for its domestic needs. The Dangote refinery represents a strategic pivot towards self-sufficiency in petroleum products. It is projected that, once fully operational and producing at capacity, the refinery could not only satisfy domestic demand but also produce a surplus for export. This would be a landmark achievement for Nigeria, enabling it to reduce its dependence on imported fuel despite its abundant crude oil resources.
The trade dynamic between the U.S. and Nigeria has been further influenced by global geopolitical and economic factors. Earlier, U.S. crude exports to Asia had seen a downturn amid trade tensions between the United States and China, redirecting more U.S. crude towards alternative markets like Nigeria. This redirection has been facilitated by logistical and technical advantages that U.S. crude, particularly WTI, offers to refineries in need of high-quality feedstock.
Looking ahead, the landscape of global crude oil exchange continues to evolve, with the United States poised to play a pivotal role as a net exporter to countries like Nigeria. This shift is set against a backdrop of changing refinery capacities within the U.S. itself, including the impending shutdown of two refineries in California, further influencing domestic crude oil demand dynamics.
As Nigeria seeks to enhance its crude oil production—currently trailing its OPEC+ quota—and aims for a production capacity boost in the medium term, the country’s energy sector stands at a crossroads. The government’s ambitions to elevate production levels and the strategic import of U.S. crude for the Dangote refinery underline Nigeria’s multifaceted approach to addressing its energy needs and capitalizing on its oil wealth.
This unfolding narrative of crude oil trade between the U.S. and Nigeria not only highlights the complexities of global energy markets but also underscores the strategic manoeuvres by nations and corporations to secure their energy future in a fast-changing world.
