The shutdown of refineries across Europe and North America has tightened global fuel markets and handed Nigeria’s Dangote refinery greater leverage in shaping refined product balances, according to energy intelligence firm Kpler.

In a report, Kpler said the scale of refinery exits in Europe and North America has structurally altered supply dynamics, noting that “around ~900,000 bpd of capacity in the West of Suez was permanently removed from the system.”

According to the report, these shutdowns have had far-reaching consequences for global fuel supply, as the erosion of baseline capacity reduced operational flexibility and amplified the market impact of outages, keeping refined product balances tight and margins elevated through much of the previous year.

Kpler said the closures have been particularly significant for the Atlantic Basin, where the removal of European capacity has increased reliance on late-cycle mega-refineries to stabilise supply.

“The Atlantic Basin enters 2026 at a structural inflection point. The permanent closure of nearly 800,000 barrels per day of refining capacity across Europe and North America has materially tightened product balances, particularly for middle distillates. Against this backdrop, the market’s ability to rebalance increasingly depends on the operational normalisation of two late-cycle mega-refineries, 650,000 bpd Dangote and 340,000 bpd Dos Bocas, both of which were designed to anchor regional supply,” the report said.

However, it was noted that Dangote’s influence has so far been limited, saying the refineries have so far “underdelivered” despite progress on unit commissioning.

Kpler said the combination of European refinery shutdowns and Dangote’s delayed ramp-up has tightened fuel markets further, increasing the market impact of any operational progress at the Nigerian plant.

It added that Dangote’s operational challenges have constrained its ability to fully exercise that leverage, noting that “unresolved mechanical issues at the RFCC, its core conversion unit, have capped utilisation at roughly 60–65%, preventing the refinery from exerting its intended influence on Atlantic Basin product flows.”

Still, it stressed that Europe’s refinery exits mean the stakes around Dangote’s performance are now higher than originally anticipated.

Kpler described the corrective shutdown at the refinery as “a pivotal inflection point”, adding that a successful outcome could allow Dangote to move “from marginal participation to structural relevance in clean product balances from mid-2026”.

At full utilisation, it stated that the refinery could add “approximately 300,000 bpd of gasoline, 150,000 bpd of gasoil, and 140,000 bpd of jet fuel volumes, capable of easing the tightness created by global refinery shutdowns.

“Dangote has demonstrated meaningful progress by commissioning all secondary units and sustaining partial throughput to meet domestic demand. However, unresolved mechanical issues at the RFCC, its core conversion unit, have capped utilisation at roughly 60–65 per cent, preventing the refinery from exerting its intended influence on Atlantic Basin product flows. A major corrective shutdown initiated in mid-December, lasting 50–60 days, represents a pivotal inflection point.

“Successful execution would allow Dangote to move from marginal participation to structural relevance in clean product balances from mid-2026, adding ~300kbd of gasoline, ~150kbd of gasoil, and ~140kbd of jet fuel at full utilisation.”

According to Kpler, until that transition occurs, the path remains narrow, with global fuel markets staying exposed as Europe’s refining footprint continues to shrink and attention remains fixed on the mega-refinery.

The President of the Dangote Group, Alhaji Aliko Dangote, announced last year that the refinery would be upgraded to 1.4 mbpd capacity to make it the largest in the world.

Last week, the Managing Director of the Dangote refinery, David Bird, disclosed that the refinery expansion could be completed in three years.

Bird said the refinery supplied 50 million litres of petrol into the market, saying the facility now operates day and night to ensure the delivery of enough fuel to the market.

Meanwhile, Engineers India Limited announced that it would lead the expansion of the Dangote refinery, a project that will increase the facility’s capacity from 650,000 barrels per day to 1.4 million barrels per day.

In a statement, EIL said it had signed a contract agreement valued at more than $350m with the Dangote Group to serve as Project Management Consultant and Engineering, Procurement and Construction Management Consultant for the expansion project. (PUNCH)

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