Dangote Refinery Buffers West Africa as Middle East Tensions Roil Oil Markets
Accra, Ghana – Rising geopolitical tensions in the Middle East are sending shockwaves through global oil markets, but West Africa is finding a degree of resilience thanks to the increased production capacity of Nigeria’s Dangote Refinery, according to officials. Global oil prices surged past $100 a barrel Monday following escalating conflict involving Iran and Israel, raising fears of widespread supply disruptions.
Godwin Edudzi Tameklo, CEO of Ghana’s National Petroleum Authority, stated the refinery is “providing a significant buffer for the West African sub-region” amid the uncertainty. The refinery, owned by Africa’s richest man, Aliko Dangote, is capable of producing approximately 650,000 barrels per day, a substantial volume that strengthens regional supply and allows for potential exports.
“The presence of Dangote has changed the dynamics greatly because he is also doing significant production in Nigeria,” Tameklo said in a recent TV3 interview. “The production he is doing…is quite significant and gives him the capacity to export a large portion.”
The situation is particularly relevant for Ghana, which currently imports 80% of its crude oil products from Europe and 20% from the Arabian region. Tameklo warned that ongoing tensions could impact supply chains, especially for European refineries that serve Ghana and other nations.
The crisis intensified after reported military campaigns against Iran, allegedly resulting in the death of Supreme Leader Ali Khamenei, prompting retaliatory missile strikes targeting Israel and Gulf countries. Experts warn that threats to the Strait of Hormuz – a critical waterway for global energy trade, handling nearly one-fifth of the world’s oil and liquefied natural gas – are a major concern.
“Roughly one-fifth of global oil and LNG flows through the Strait of Hormuz. This is not an obscure canal; it is the aorta of the global energy system,” said Stephen Innes of SPI Asset Management.
Disruptions to energy infrastructure are already being reported, including halted operations at Saudi Arabia’s Ras Tanura refinery following a drone attack and temporary suspension of liquefied natural gas production by QatarEnergy. Shipping routes are also being affected, with Maersk diverting vessels around the Cape of Good Hope, adding to delivery times and costs.
While commodity-exporting African economies like Ghana and South Africa may benefit from higher oil and gold prices – gold prices recently hit record highs around $5,426 per ounce – economists caution that sustained energy price increases could fuel global inflation, impacting the cost of transportation, food, and industrial goods.
Ghanaian authorities are closely monitoring the global energy market and engaging with international partners to mitigate potential impacts. “We are not leaving anything to chance,” Tameklo assured, highlighting strong coordination between the sector minister, national security, and the presidency. The government is analyzing supply trends in Europe, particularly in Rotterdam, to determine how to best buffer against potential disruptions to Arabian imports.
