0
LAGOS – Experts have said that lower fuel imports have significantly reduced demand for foreign exchange, helping ease pressure on the naira and supporting stability in the foreign exchange market.
This is as Nigeria recorded its fourteenth consecutive quarterly trade surplus in the first quarter of 2026, underscoring the growing impact of domestic refining, resilient export earnings, and reduced import dependence on the country’s external sector.
Latest data from the National Bureau of Statistics (NBS) showed that the total value of merchandise trade stood at N34.8 trillion in Q1 2026, representing a decline of four percent quarter-on-quarter and seven percent year-on-year.
Despite the moderation in overall trade volumes, the country maintained a robust trade surplus of N7.6 trillion as exports continued to outpace imports by a wide margin.
For much of the past decade, petroleum imports represented one of Nigeria’s largest sources of dollar demand. Importers regularly sourced foreign exchange to finance fuel purchases, placing additional strain on reserves and contributing to exchange rate volatility.
The latest trade figures suggest that domestic refining is beginning to provide a buffer against such pressures.
With fewer dollars required for fuel imports, Nigeria’s external reserves can be deployed more efficiently while monetary authorities gain greater flexibility in managing exchange rate stability.
The development also aligns with broader efforts by the Central Bank of Nigeria (CBN) to improve liquidity in the foreign exchange market and restore investor confidence.
Interestingly, while refined fuel imports declined sharply, imports of primary or unrefined fuel and lubricants surged by 60 percent year-on-year to N1.9 trillion.
Analysts attribute this increase to growing demand for crude oil feedstock required by domestic refineries.
The rise suggests that Nigeria’s refining sector is expanding rapidly and increasingly sourcing crude supplies to sustain production levels.
Rather than indicating a setback, the trend reflects the transition from importing finished petroleum products to importing or reallocating crude feedstock for domestic processing.
Economists argue that this shift creates greater value addition within the economy, supports industrial activity and generates employment opportunities across the petroleum value chain.
The NBS report revealed that exports amounted to N21.2 trillion, while imports stood at N13.6 trillion during the period under review.
Analysts say the sustained surplus reflects a significant shift in Nigeria’s trade dynamics, driven by stronger export receipts and a sharp reduction in fuel imports following increased domestic refining capacity led by the Dangote Refinery.
Nigeria’s export earnings rose by three percent quarter-on-quarter and 12 percent year-on-year to N21.2 trillion, providing the foundation for the country’s positive trade balance.
Crude oil remained the dominant export commodity, contributing approximately 53 percent of total export earnings. Revenue from crude oil exports reached N11.2 trillion in the first quarter, rising 15 percent from the previous quarter despite recording a 14 percent decline compared to the corresponding period of 2025.
The quarterly improvement reflected stronger crude production levels and improved export volumes, even as international oil prices remained volatile amid geopolitical tensions across major producing regions.
Beyond crude oil, Nigeria’s export diversification efforts showed some progress. Exports excluding crude oil grew by 30 percent year-on-year and eight percent quarter-on-quarter to N10 trillion, accounting for nearly 47 percent of total exports.
However, the data also highlighted the continued weakness of the country’s non-oil export sector. Exports excluding both oil and gas contributed just 15 percent of total exports, amounting to N3.2 trillion.
The modest one percent growth recorded both year-on-year and quarter-on-quarter suggests that while Nigeria is making strides in expanding exports beyond crude oil, the economy remains heavily dependent on hydrocarbons for foreign exchange earnings.
Economic analysts note that the limited contribution of non-oil exports continues to expose the country to fluctuations in global commodity markets and underscores the need for stronger investment in manufacturing, agriculture, solid minerals and value-added exports.
Perhaps the most significant development in the trade report was the dramatic decline in fuel imports, which has fundamentally altered Nigeria’s import profile.
Total imports fell sharply by 18 percent year-on-year and 21 percent quarter-on-quarter to N13.6 trillion, reflecting weaker import demand and changing patterns in the energy sector.
The decline was largely attributed to a substantial reduction in imports of refined petroleum products following increased local production from the Dangote Refinery and other domestic refining facilities.
Imports of Premium Motor Spirit (PMS), commonly known as petrol, plunged to just N87.4 billion in Q1 2026, compared to N2.3 trillion recorded during the corresponding period in 2025.
The scale of the decline illustrates the extent to which domestic refining is beginning to replace imports that historically consumed billions of dollars annually and placed considerable pressure on Nigeria’s foreign exchange reserves.
A broader category comprising processed fuel and lubricants also witnessed a steep decline. Imports in this segment dropped to N605.5 billion from N4.9 trillion recorded a year earlier.
Industry observers describe the development as one of the most significant structural shifts in Nigeria’s external trade position in decades.
For years, despite being Africa’s largest crude oil producer, Nigeria spent enormous amounts importing refined petroleum products due to inadequate local refining capacity.
The commencement of large-scale refining operations by the Dangote Refinery has started to reverse that trend, reducing dependence on imported fuel while helping retain more foreign exchange within the economy.
The sharp reduction in fuel imports has implications beyond the trade balance.
Despite The Positive Outlook, Risks Remain
Global trade continues to face uncertainty arising from geopolitical tensions, particularly in the Middle East, where conflicts have contributed to volatility in energy markets and shipping routes.
Higher oil prices generally benefit Nigeria’s export earnings, but prolonged geopolitical instability could also disrupt global supply chains and weaken demand from key trading partners.
Additionally, the country’s heavy reliance on crude oil exports remains a vulnerability.
Although non-crude exports are growing, their contribution remains insufficient to offset potential shocks from lower oil prices or production disruptions.
Experts therefore stress the importance of accelerating export diversification initiatives, improving infrastructure, reducing logistics costs and enhancing competitiveness in non-oil sectors.
Looking ahead, analysts expect Nigeria’s trade surplus to remain firmly in positive territory through the remainder of 2026.
