US-Iran War Boosts Dangote’s Fortune by $5bn

By Adedapo Adesanya

Africa’s richest man, Mr Aliko Dangote, has seen his fortune increase by more than $5 billion since February, with the surge in demand for refined petroleum products following the Iran war emerging as a major factor behind the gain.

According to a report by the New York Times, Mr Dangote’s $20 billion refinery in Lagos reached full operating capacity weeks before the United States and Israel launched their attack on Iran on February 28. Since the conflict began, disruptions to global fuel supplies have driven buyers towards alternative sources, increasing demand for products from the Nigerian refinery.

The refinery has rapidly expanded its presence in international markets. According to S&P Global Energy, it was the world’s largest single exporter of jet fuel during April and May, while a senior Dangote Industries executive said it became Europe’s largest supplier of jet fuel and diesel in July. The facility also shipped jet fuel to the US market for the first time this year.

The disruption to global energy supplies has been particularly severe following Iran’s closure of the Strait of Hormuz, a major route through which up to one-fifth of global oil supplies normally pass. Ukrainian attacks on Russian refineries and tankers have also reduced the flow of Russian petroleum products into Africa.

The publication said that the disruptions have exposed Africa’s dependence on imported refined petroleum products despite the continent’s crude oil production. East Africa, for instance, sourced more than 65 per cent of its refined products from the Middle East last year, leaving several markets vulnerable to the supply disruptions caused by the conflict.

The Dangote Refinery has consequently become an important alternative supplier, particularly for African buyers previously dependent on Middle Eastern supplies.

Analysts cited in the report backed up claims that the facility has provided a lifeline to markets affected by the disruption, with exports expanding into Europe and other African countries.

The development has also strengthened investor interest in the refinery. Dangote Refinery recently secured a $1 billion underwriting programme ahead of a planned initial public offering, comprising a fully funded $600 million private-placement tranche and a further $400 million commitment linked to the proposed IPO. The refinery has applied to raise about $5 billion through the offering.

The planned listing, expected to take place in October subject to regulatory approval and market conditions, could become one of Africa’s largest-ever public offerings. The refinery has a processing capacity of about 700,000 barrels of crude oil per day and is majority-owned by Mr Dangote.

While the geopolitical crisis has increased costs and fuel prices across much of Africa, it has created a significant commercial opportunity for Dangote’s refinery, helping to propel the businessman’s wealth higher while strengthening the facility’s position in the global refined petroleum market.