October 22, 2026/Cordros Report
Nigeria’s trade position strengthened significantly in Q2-26, with the trade surplus widening to NGN12.60 trillion from NGN7.55 trillion in Q1-26 (Q2-25: NGN6.26 trillion) – the fifteenth consecutive quarterly surplus and the widest on record. The outturn was primarily driven by increased domestic refining activity, which boosted exports of refined petroleum products and reduced reliance on fuel imports. Exports rose by 18.8% y/y (+27.6% q/q) to NGN27.02 trillion, supported by firmer crude oil output and prices alongside higher refined petroleum product exports of NGN10.38 trillion (38.4% of exports). Imports fell by 12.6% y/y (+5.9% q/q) to NGN14.42 trillion, as refined petroleum product imports declined by 73.1% y/y to NGN1.08 trillion. We view the transition as structural, not cyclical.
The expansion in domestic refining capacity, led by Dangote Refinery and supported by modular refineries, is changing Nigeria’s role from an importer to a net exporter of refined petroleum products. By increasingly meeting domestic fuel demand while supplying export markets, this capacity provides a more lasting basis for the trade improvement, underpinning the reversal from a deficit of nearly NGN10.00 trillion in 2024 to a surplus of about NGN9.30 trillion in Q2-26 alone. Overall, we expect the trade surplus to remain firmly positive, supported by sustained petroleum product exports and structurally lower fuel imports, although the pace may moderate as domestic activity recovers, and a firmer naira supports import growth.
The National Bureau of Statistics (NBS) recently released Nigeria’s foreign trade statistics for Q2-26, and one message stood out clearly: domestic oil refining activity is becoming an increasingly important driver of the country’s external trade and, more broadly, the wider economy.
Several key developments in the Q2-26 trade statistics, including the record trade surplus, lower fuel imports and changing export mix, reflect the growing contribution of domestic refining. This contribution is captured within the Other Oil Products category, which includes refined petroleum products alongside natural gas and other mineral fuels. Domestic refining is therefore progressively influencing both sides of the country’s trade account.
Higher capacity utilisation at the Dangote Refinery and other modular refineries supported Nigeria’s transition from a major importer of refined fuel to a net exporter of petroleum products. Vessel tracking data from Vortexa also confirmed the scale of this shift. In Q2-26, seaborne petroleum product shipments from Nigeria averaged 561,000 b/d, about seven times the 2023 annual average (79,000 b/d).
Nigeria’s Trade Structure Before Domestic Oil Refining Ramp-Up
To establish whether the current transition represents a structural break rather than a temporary improvement, we examine the country’s trade position before the expansion in domestic refining capacity. In 2021, imports of refined petroleum products represented a significant burden on the country’s trade balance. For context, Nigeria had a net deficit of about NGN4.09 trillion (USD10.03 billion), largely reflecting dependence on refined petroleum products, with imports of NGN6.45 trillion (USD15.74 billion) for the product (31.0% of imports). Total exports in the period amounted to NGN18.91 trillion (USD46.24 billion) – Nigeria exported NGN2.36 trillion (USD5.76 billion) of refined petroleum products (12.5% of exports).
Although Nigeria’s overall trade was a surplus of NGN1.21 trillion (USD2.84 billion) in 2022 and NGN5.10 trillion in 2023 (USD7.90 billion), the Other Oil Products sub-category recorded a deficit of NGN6.96 trillion (USD16.34 billion) and NGN8.16 trillion (USD12.65 billion), respectively, indicating that petroleum related imports continued to weigh on overall earnings. In 2024, the trend remained the same, as Nigeria’s total trade surplus stood at NGN16.85 trillion (USD11.39 billion), while the Other Oil Products recorded a deficit of NGN9.96 trillion (USD6.73 billion). However, in 2025, the dynamics changed as the account recorded a surplus of NGN8.70 trillion (USD5.73 billion), against Nigeria’s overall trade surplus of NGN17.78 trillion (USD11.71 billion). This contribution strengthened further in Q2-26, when the category’s NGN9.30 trillion (USD6.81 billion) surplus accounted for about 73.8% of the total trade surplus of NGN12.60 trillion (USD9.22 billion). In our view, this reversal highlights a significant change in Nigeria’s trade structure, with non-crude petroleum trade becoming a major source of net export earnings after years of weakening the trade balance.
Nigeria’s Domestic Oil Refining Sub-Sector Transition
The domestic oil refining sub-sector is central to the Q2-26 trade story. As a result, the sub-sections below set out the evidence in turn: the sub-sector’s output, its exports, and the fall in fuel imports.
Oil-refining sub-sector performance: We begin with the sub-sector’s output in the national accounts, which provides evidence of an expansion in real activity rather than growth driven solely by prices. In Q2-26, oil refining activity recorded real gross domestic product (GDP) growth of 43.94% y/y (Q1-26: 37.46% y/y; Q2-25: 15.78% y/y), its strongest quarterly reading on record. The turnaround has been recent and sharp – oil refining GDP contracted by 14.67% in 2024, then returned to growth of 11.51% in Q1-25 and accelerated to a record growth of 43.94% in Q2-26). The sub-sector has therefore moved from contraction to rapid expansion as the refineries’ capacity utilisation increased.
The expansion in the sub-sector is also evident in nominal output. The value of oil refining GDP more than doubled between Q1-26 (NGN2.46 billion) and Q2-26 (NGN5.36 billion). Nominal GDP growth also increased strongly, reaching 90.85% y/y in Q2-26 (Q1-26: +57.06% y/y; Q2-25: 16.36% y/y), alongside the sharp increase in real GDP growth. Together, these indicators point to a substantial increase in refining activity.
Refined petroleum products are becoming a major export driver: Exports of refined petroleum products reached NGN10.38 trillion (USD7.60 billion) in Q2-26 (Q1-26: NGN6.78 trillion – USD4.96 billion; Q2-25: NGN7.74 trillion – USD4.90 billion), up 53.0% q/q and 34.1% y/y. The category now accounts for 38.4% of total exports, closing in on crude oil exports at 47.8% in Q2-26. Gas oil (diesel), jet fuel/kerosene, and petrol, historically marginal export categories, now rank among Nigeria’s major exports. In H1-2026, refined petroleum product exports reached NGN17.16 trillion (USD12.56 billion), already equivalent to 68% of the full year 2025 total of NGN25.34 trillion (USD16.69 billion).
Crude oil exports rose by 7.9% y/y (+15.3% q/q) in Q2-26 to NGN12.91 trillion (USD9.45 billion), supported by the recent global market disruption. Outside the oil complex, performance was uneven. Raw materials exports surged 181.2% y/y (+50.3% q/q) to NGN2.31 trillion (USD1.69 billion), and solid minerals exports rose 90.0% y/y (+42.9% q/q) to NGN146.91 billion (USD107.55 million). By contrast, agricultural exports fell 36.1% y/y (+31.5% q/q) to NGN802.99 billion (USD587.86 million), while manufactured goods exports fell 51.1% y/y (-29.9% q/q) to NGN393.03 billion (USD287.73 million). Overall, the export base remains heavily concentrated in hydrocarbons, with crude oil and refined petroleum products accounting for about 86% of the country’s total exports.
Refined petroleum imports have declined sharply: The more pronounced adjustment has occurred on the import side. Refined petroleum product imports fell to NGN1.08 trillion (USD790.66 million) in Q2-26, down 73.1% y/y from NGN3.99 trillion (USD 2.92 billion) in Q2-25. Their share of total imports dropped from 24.3% to just 7.5%. The step change is visible between Q4-25 and Q1-26 and was sustained through Q2-26, as domestic production increasingly substituted for imported refined petroleum products.
Nigeria imported nearly 400,000 b/d of petroleum products in 2023, while seaborne product imports had fallen to under 130,000 b/d by Q2-26. The physical shipping cross check — seaborne imports down to under 130,000 b/d against domestic supply of about 221,000 b/d — is set out in the next sub-section.
Independent evidence confirms the transition: Given the significance of this finding, we triangulate the trade data using alternative trade classification and physical shipping data. The evidence is consistent across both measures.
The Broad Economic Categories (BEC) fuel import collapse: The fuels and lubricants import line fell from NGN5.56 trillion (USD3.52 billion) in Q2-25 to NGN1.77 trillion (USD1.30 billion) in Q2-26, a 68.2% contraction. Within the category, motor spirit (petrol) imports fell by roughly two-thirds, while imports of other processed fuels declined to NGN0.03 trillion from NGN1.08 trillion.
Physical Shipping Data: Vessel tracking data show an expansion in Nigeria’s petroleum product exports following the start of Dangote Refinery’s operations in 2024. Exports increased from an annual average of 46,000 b/d in 2023 to 146,000 b/d in 2024, as the range of exported products broadened to include naphtha, jet fuel, kerosene and fuel oil. The expansion continued in 2025, as exports to Europe averaged 40,000 b/d and those to other African countries averaged 89,000 b/d. By Q2-26, these flows had increased to 130,000 b/d and nearly 120,000 b/d, respectively, while total exports reached 350,000 b/d. Including shipments between Nigerian ports, total seaborne shipments averaged 561,000 b/d in Q2-26. Taken together, the trade classification and physical flow data provide independent confirmation of the adjustment in Nigeria’s refined fuel trade.
Impacts of the Transition on Nigeria’s Trade Account
A record surplus, driven by both sides of the trade accounts: Nigeria recorded a trade surplus of NGN12.60 trillion (USD9.22 billion) in Q2-26, 66.9% higher than the previous quarter and roughly double the corresponding period of the previous year, on exports of NGN27.02 trillion (USD19.78 billion) against imports of NGN14.42 trillion (USD10.56 billion). Exports rose 18.8% y/y (+27.6% q/q) while imports fell 12.6% y/y (+5.9% q/q). This widening surplus therefore reflects both stronger exports and a lower import bill.
Fuel substitution is lowering the import bill: Fuel imports have historically been a major component of Nigeria’s import bill, making their sharp decline an important offset to continued growth in investment-related imports. Machinery, capital goods, industrial supplies and transport equipment all continued to grow y/y, consistent with stronger investment-related activity. Construction grew by 6.75% y/y in Q2-26, while cement manufacturing expanded by 12.75% y/y in Q2-26. Yet total imports still declined, indicating that the reduction in fuel imports was the principal factor behind the lower overall import bill.
The composition of imports is also shifting towards capital goods and production inputs, which could be more supportive of domestic investment and productive capacity. On a q/q basis, total imports rose 5.9%, following a sharp 21.1% contraction in Q1-26. This increase was led by manufactured goods (+12.1% q/q to NGN9.51 trillion), agricultural imports (+45.4% to NGN1.20 trillion) and raw materials (+13.1% to NGN1.79 trillion). In our assessment, the rebound is more consistent with a recovery in domestic economic activity than with a renewed deterioration in the trade position. Improved FX liquidity and greater naira stability are likely supporting higher imports of industrial inputs, which should be more closely associated with productive activity than the previous fuel driven dependence.
Domestic refining is changing Nigeria’s direction of trade: The changing composition of exports is also reflected in their destinations. Several major destinations now receive predominantly non-crude cargo, while refined petroleum products account for a large share of Nigeria’s exports to West Africa. This reinforces Nigeria’s emergence as a refined fuel supplier to the sub-region. Several African governments, including South Africa, Ghana and Kenya, have reportedly explored supply arrangements with the Dangote Refinery, suggesting a potential wider market for Nigerian products in West and Southern Africa.
On the import side, the reduction in fuel imports has done little to change the broader concentration of Nigeria’s import sources. China alone supplies about 41.0% of imports, primarily machinery and manufactured goods. The oil refining transition has therefore reduced Nigeria’s dependence on imported fuel, without materially reducing reliance on external suppliers of capital goods. This distinction is important when assessing the extent of the resilience created by the shift.
Domestic Oil Refining Sub-sector and the Broader Economy
The oil refining transition is unfolding during a phase of macroeconomic stabilisation that shapes how its benefits are transmitted across the economy.
External balance and foreign exchange: An improvement in the refined fuel trade balance supports the external position by reducing a persistent source of FX demand while increasing FX earnings from refined petroleum products exports. This has occurred alongside a more stable FX environment, with the naira holding broadly stable through H1-26 (around NGN1,380.00/USD in the official window) and external reserves rising by 38.3% y/y to about USD51.46 billion (as of June 30). A durable reduction in fuel import needs should provide additional support to the external position by removing one of the recurring sources of FX pressures that contributed to past bouts of currency instability.
Domestic Price Pressures: Headline inflation eased to around 15.9% by mid-2026, supported in part by greater naira stability. The oil refining transition intersects with inflation through pass-through of higher energy costs. A more reliable domestic supply of petrol, diesel and jet fuel reduces exposure to import logistics shocks and FX pass-through in fuel prices – the transmission mechanism that made energy a persistent inflation driver in 2023-24. The effect is meaningful but partial. Food inflation, the largest CPI component, continued to rise because of supply-side and security factors unrelated to fuel. Accordingly, oil refining should provide a disinflationary tailwind rather than materially resolve broader inflationary pressures.
Fiscal Policy and subsidy: The move from being a major importer of petroleum products to producing it domestically has fiscal ramifications beyond the trade account. Domestic refining can broaden the tax base by stimulating activity in transport, distribution and related businesses. However, replacing imported fuel may reduce customs duty levies, while tax incentives limit direct receipts from refining. On expenditure, producing fuel locally does not automatically eliminate subsidy costs; fiscal savings depend on maintaining market-based pump prices and ensuring that subsidy savings reach public accounts, providing more room for infrastructure and social spending.
Value addition and industrial diversification: Refining crude into exportable products represents value addition; it moves Nigeria further up the hydrocarbon value chain and reduces reliance on the export of unprocessed crude oil. The broader sub-sector is also extending beyond fuel, with fertiliser (urea) output contributing to Nigeria’s emergence as a net exporter of agricultural inputs. Urea already ranks among the country’s leading exports in the trade book.
This represents diversification within and adjacent to the hydrocarbon base rather than away from it, but it is nevertheless a step up the industrial ladder and a potential template for further import substitution.
Looking Ahead: Durability, Risks and Outlook
The durability of the transition will depend on whether the increase in refining capacity translates into sustained production and export volumes. The main risks are operational concentration, feedstock sourcing and changes in global energy prices. These factors warrant close monitoring over the next one to two quarters before the durability of the transition can be assessed with greater confidence.
Looking ahead, we expect Nigeria’s trade balance to remain firmly in surplus in Q3-26, supported by sustained petroleum exports and lower refined fuel imports. The pace of improvement may moderate as the recovering economy and greater FX stability gradually lift import demand. At the same time, the extent to which refining capacity remains operational and export volumes are sustained will be important in determining whether the current improvement represents a lasting change in Nigeria’s external trade structure.