Assessment of the Impact of Petroleum Product Import Dependence on Nigeria’s Trade Balance

This study assesses the impact of Nigeria's heavy dependence on imported petroleum products on the country's trade balance and current account position, a paradox that sees Africa's largest oil producer spending billions of dollars annually importing refined fuel products due to inadequate domestic refining capacity. The Dangote Refinery, which commenced operations in 2023, represents a potential structural shift in this dynamic, yet its full impact on import bills and trade balances requires empirical assessment. The research employs a secondary data design drawing on petroleum import statistics, crude oil export revenue data, and current account balance series from the CBN Statistical Bulletin and the National Bureau of Statistics for the period 2015 to 2023. Trend analysis, ratio analysis, and basic regression are used as analytical tools. The theoretical framework draws on the trade balance and current account sustainability literature in international macroeconomics. The study traces the annual foreign exchange cost of petroleum product imports, examines its share of total import expenditure, and analyses its effect on the current account deficit and foreign exchange reserve adequacy. Particular attention is paid to periods of international crude oil price decline when petroleum import costs coincide with export revenue losses, creating a double squeeze on the trade balance. Findings are expected to confirm that petroleum product import dependence is a structural driver of Nigeria's persistent current account vulnerabilities. Recommendations include accelerated refinery capacity expansion, domestic petrochemical industry development, and pricing policies that support refinery viability. Keywords: petroleum imports, trade balance, refining, Nigeria, current account