The Federal Government of Nigeria is expected to supply up to 400,000 barrels of crude oil daily to the Dangote refinery as part of a newly initiated naira-for-crude agreement.

This arrangement, reported by Bloomberg, is expected to unfold over the next two months, culminating in a total delivery of approximately 24 million barrels between October and November 2024.

This strategic move is anticipated to significantly enhance the refinery's processing capacity, which could have far-reaching effects on both its operations and the broader local oil industry.

The commencement of this naira-for-crude deal follows recent announcements from the Federal Government, indicating that the Nigerian National Petroleum Company Limited (NNPC) is set to initiate crude oil deliveries in naira to the Dangote Petroleum Refinery this week.

Alongside this, three additional refineries are preparing to begin production of Premium Motor Spirit (PMS).

According to cargo allocations analyzed by Bloomberg News, Dangote's increasing dependence on local crude sources is likely to disrupt the Atlantic oil market by significantly reducing Nigeria's crude exports.

The Dangote refinery, with a capacity of 650,000 barrels per day—making it the largest single-train refinery in Africa and Europe—will require 13 to 14 shipments from Nigeria's typical monthly program of around 50 cargoes.

Ronan Hodgson, an analyst at FGE based in London, has noted that the West African crude market is expected to become "substantially tighter" in the fourth quarter due to this supply commitment. He warned that Nigerian exports could potentially drop below one million barrels per day as a result.

While some shipments may face delays—October’s schedule already includes two cargoes postponed from September—the planned volume represents a significant increase compared to the average of 255,000 barrels per day that Dangote processed during the first half of the year.