Nigeria, Africa Risk Fuel Shortage as Global Supply Faces Disruption

Nigeria and several African countries could experience fresh fuel supply challenges following disruptions in global energy shipping linked to rising tensions involving Iran.

The United States government has moved to stabilise maritime insurance and shipping operations in the Persian Gulf after major insurers warned they may stop providing war-risk coverage for vessels entering the region.

Beginning March 5, members of the London-based International Group of Protection and Indemnity Clubs are expected to withdraw automatic war-risk insurance for ships operating in the Gulf, citing increased threats such as missile and drone attacks as well as possible vessel seizures.

The development has raised concerns across the global shipping industry. Lloyd’s of London, which underwrites about 80 per cent of the world’s war-risk insurance, remains central to the system, but rising security risks have already pushed premiums higher. Analysts estimate marine hull insurance in the Gulf could rise by between 25 and 50 per cent.

In response, U.S. President Donald Trump said he had directed the U.S. International Development Finance Corporation to introduce a political risk insurance scheme to support maritime trade, particularly shipments of energy products. He also indicated that the U.S. Navy could escort oil tankers through the Strait of Hormuz if necessary to ensure uninterrupted energy flows.

The Strait of Hormuz accounts for more than 20 per cent of global oil and liquefied natural gas (LNG) trade. Concerns over possible disruptions have already pushed Brent crude prices above $83 per barrel.

For Nigeria, which still depends heavily on imported refined petroleum products despite being a major crude oil producer, rising freight and insurance costs could translate into higher fuel prices and increased pressure on foreign exchange.

The situation has been worsened by a force majeure declared by QatarEnergy after Iranian strikes reportedly targeted facilities connected to Ras Laffan, forcing the world’s largest LNG exporter to suspend production at key infrastructure. The development could tighten global gas supply, particularly for Europe, which has increasingly relied on seaborne LNG after reducing pipeline imports from Russia.

In Asia, India’s Mangalore Refinery and Petrochemicals Limited has also declared force majeure on gasoline exports as crude supplies from the Gulf slow down. India, which imports about 85 per cent of its crude oil, had recently increased purchases from the Middle East.

Market analysts say Europe could turn to diesel cargoes currently stored offshore in West Africa, especially near Lome, where record volumes of fuel are held. While this may temporarily support European demand, it could reduce product availability within West Africa if traders redirect supplies.

Data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) show that Nigeria still imports about 63 per cent of its diesel. Local refineries, including Dangote, Waltersmith, Edo and Aradel, collectively produce about 6.1 million litres daily, far below the country’s estimated demand of 17 million litres per day.

Figures from S&P Global Commodity at Sea also indicate that diesel shipments from India to West Africa have surged since 2022, reaching nearly 800,000 metric tonnes by early 2026, highlighting the region’s heavy reliance on imported refined fuel.

Industry data further show that about 4.2 million barrels of diesel and gasoil were held in floating storage in the offshore Lome market as of March 2, the highest level recorded since data collection began. Of this volume, roughly 2.43 million barrels originated from India’s Jamnagar refinery.