Why Dangote's refinery is importing crude from the US
Nigeria's Dangote, the largest oil refinery in Africa, is gearing up to import crude from the US, reflecting the heightened competitiveness of American barrels in the global market.
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Trafigura Group according to Bloomberg sold 2 million barrels of WTI Midland to the Dangote refinery for delivery at the end of February. This marks the first instance of the massive refinery procuring non-Nigerian crude.
The surge in US oil supply over the past decade has reshaped the global market, influencing regions like Asia.
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The Dangote refinery, with a daily processing capacity of 650,000 barrels, owned by Africa's richest individual, Aliko Dangote, commenced operations recently, aiming for an initial processing rate of 350,000 barrels per day.
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Despite being located in a major oil-producing country, the refinery is opting to buy from the US, a move likely influenced by pricing considerations, as West Texas Intermediate Midland barrels are generally more affordable than Nigerian grades, which are benchmarked against North Sea's Brent.
The refinery, equipped to process various African crudes and supplies from the US and Saudi Arabia, is slated to start gasoline production in March.