A war in Iran should not ground motorists and economic activities in Addis Ababa, Ethiopia. Yet, last week, Beka Atoma and Eshetu Wadimu slept in their cars, trapped in fuel queues after over 180,000 metric tonnes of supply was constrained by the war in the Middle East.

In Nigeria, even with the Dangote petroleum Refinery’s filling the gap, prices have surged by 60 per cent, revealing a market that behaves less like a solution and more like a monopolist industry tethered to global shocks.

Across Africa, especially in the South and East, where fuel import dependence exceeds 90 per cent, the crisis shows that the continent’s energy system is not just fragile but also dangerously exposed.

As each speaker from across the continent climbed the stage at the just-concluded conference of the African Refiners and Distributors Association in Cape Town, South Africa, the vulnerability of Africa’s fuel market was the major take away. As seen during the COVID19 crisis and Russia/Ukraine war, delayed tankers and rerouted shipments, they spiked insurance premiums and other challenges became a basis for soaring fuel prices and scarcity.

Africa produces crude oil, but depends overwhelmingly on other markets to refine it. According to the African Petroleum Producers’ Organisation (APPO), Africa produces roughly seven million barrels of crude oil per day but refines only about 1.7 million barrels locally, leaving nearly 70 per cent of its refined fuel needs to importation.

APPO Secretary-General, Farid Ghezali, said the challenge is “not merely an economic paradox but also a structural imbalance,” warning that the continent loses an estimated $50 billion yearly through external refining, missed industrialisation opportunities and job losses.

A continent exposed
Global energy markets have become increasingly volatile in recent years, shaped by the Russia–Ukraine War and escalating tensions in the Middle East. The disruptions have strained supply chains, driven up freight and insurance costs, and intensified price volatility.

According to Founder and Managing Partner of Premier Invest, Rene Awambeng, geopolitical tensions have intensified supply chain instability, increased freight and insurance costs as well as fueled oil price volatility.

For African economies, he explained, the shocks translate directly into higher fuel prices, mounting pressure on foreign exchange reserves and cause fiscal strain on governments.

In practical terms, this means African countries are paying more for fuel they could produce themselves.

In Nigeria, like in Kenya, South Africa, Ghana, Uganda and others, fuel shortages have already disrupted transport systems, inflated food prices and constrained industrial output. In Nigeria, gasoline stocked, according to the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) crashed from 30.7 million liters in February to 20 million litres in March. In other countries across the continent, reserves are limited and many holds less than 20 days’ worth of fuel, according to the African Refiners and Distributors Association (ARDA). As such, even minor disruptions can cascade into national crises.

The refining paradox
Speaking at ARDA Week in Cape Town, a former Nigerian President, Olusegun Obasanjo, framed the issue bluntly, insisting that exporting crude oil only to import refined products at higher prices is “not only poor economics but also detrimental to our development and political economy.”

Obasanjo’s argument reflects a broader concern, which energy economists have maintained. Resource-rich regions that fail to develop downstream capacity remain trapped in low-value segments of global value chains. In Africa’s case, crude exports generate revenue, but refining and the industrial ecosystems it supports occur elsewhere.

The profound consequences according to Executive Secretary of ARDA, Anibor Kragha, is that the continued export of raw commodities such as crude oil, cocoa, and coffee “limits value creation and industrial growth.” Without refining capacity, Africa forfeits not just revenue, but jobs, technology transfer and industrial linkages.

Counting the cost
The financial implications are staggering as APPO estimates that Africa could retain up to $100 billion annually by developing its refining sector. In addition, expanding refining capacity could generate up to 500,000 direct jobs and 2 million indirect jobs across the continent.

Yet, the gap remains wide because the continent dependent on imports for nearly 70 per cent of its fuel consumption.

For Chairman of OPAC Refineries, Momoh Jimah Oyarekhua, “as industrialisation accelerates, this dependency will only deepen unless refining capacity is significantly expanded”.

The barriers to expansion are substantial large-scale refineries of about six times of Dangote Refinery capacity or about $120 billion, according to Oyarekhua going by estimated $10 billion and $20 billion in capital investment for one major refinery and about to $500 million for modular refineries. Access to finance therefore remains a critical constraint.

To address this, stakeholders at ARDA Week proposed raising $120 billion to develop at least six large-scale refineries comparable to the Dangote Refinery, currently Africa’s largest with a capacity of 650,000 barrels per day.

According to Senior Director at the Africa Finance Corporation (AFC), Osam Iyahen, such projects are essential for achieving “energy sovereignty” defined as control over the entire value chain from production to refining and distribution.

Iyahen noted that the Dangote Refinery alone is expected to improve Nigeria’s trade balance by about $10 billion and contribute $13 billion to output, demonstrating the scale of potential gains.

But scale is precisely the challenge as APPO warns that refineries below 100,000 barrels per day are often uncompetitive, sometimes losing up to $10 per barrel. The solution, therefore, lies in large, integrated refining hubs linked to petrochemical industries.

Pathway to transformation
To close the gap, ARDA and APPO have proposed the development of five regional refining hubs, in West, Central, East, Southern and North Africa with a combined capacity of three million barrels per day by 2035.

The suggestion reflects a shift toward regional integration, aligning with frameworks such as the African Continental Free Trade Area. By harmonising regulations, improving cross-border logistics, and integrating markets, policymakers hope to overcome fragmentation that has long hindered scale.

Co-Founder of Sahara Group, Tope Shonubi, argues that “Industrial value chains cannot scale on 54 rulebooks and dozens of currencies. Every border reset erodes competitiveness and discourages investment.”

Policy and regulation
Policy coherence remains critical because fragmented regulatory systems, inconsistent pricing frameworks, and misaligned fuel standards continue to impede progress.

For instance, many African countries price refined products based on international benchmarks such as Brent crude, even when those products are produced locally. Oyarekhua describes this as a distortion that fails to reflect domestic realities.

Efforts are underway to address these challenges. A memorandum of understanding between APPO and ARDA aims to harmonise fiscal and regulatory frameworks, expand infrastructure, and promote African-led financing solutions.

However, head of Nigeria’s Midstream and Downstream Petroleum Regulatory Authority, Saidu Mohammed caution against overly rigid approaches as he emphasised that fuel specification harmonisation must be “pragmatic and context-driven,” given the continent’s diverse capacities and infrastructure gaps.

Across Africa, existing refineries built years ago and controlled by the state do not have the capacity to produce cleaner fuel especially 50 part per million being produced by the African Union and obtainable elsewhere in Europe and America.

As Kragha noted, refining is a foundation for broader industrialisation, supporting sectors such as petrochemicals, manufacturing, pharmaceuticals, and agriculture.

Without reliable and affordable energy, efforts to build industrial capacity remain fragile. This aligns with development theory, which identifies energy infrastructure as a critical enabler of economic transformation.

In this sense, Africa’s refining deficit is not just an energy issue, it is a development constraint.
Moment of reckoning

The current crisis may also represent an inflection point. The combination of geopolitical shocks, rising demand, and technological advances has created both urgency and opportunity.

“Dangote’s progress offers a timely example of what is possible,” Managing Director of INDENI Refinery in Zambia, Evan Muata. But not until fuel is competitive and cheaper.

Indeed, the Middle East crisis has shown that global energy markets are no longer reliable backstops. For import-dependent regions, resilience must be built domestically.

Achieving that resilience will require more than infrastructure. It demands capital mobilisation, policy reform, regional cooperation, and a shift in mindset.

As Shonubi argues, perception matters because “Without confidence in its own potential, investments in policy and infrastructure would yield limited results.”

There is also a need to balance immediate energy security with long-term sustainability. Awambeng advocates for a diversified approach, incorporating natural gas and liquefied petroleum gas as transitional fuels while modernising refining technologies to reduce carbon intensity.

Africa’s dependence on imported refined fuel is not new. But the shocks of recent years, from pandemics to wars have transformed it from a structural weakness into an urgent crisis.

The numbers tell a compelling story of billions lost yearly, millions of jobs unrealised, and a continent rich in resources yet constrained by its own supply chains.

The solutions are invest in refining capacity, integrate markets, reform policies, and building of industrial ecosystems. What remains uncertain is the pace of change.

For a continent long defined by its exports, the challenge now is to retain value at home and, in doing so, redefine its place in the global energy order.