Rising tensions in the Middle East could bring Nigeria a sudden oil windfall. However, the same crisis may push petrol prices close to ₦1,200 per litre and deepen inflation at home.
Global oil markets are on edge after reports of an invasion of Iran by Israel and the United States, and the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei. As a result, fears are growing over a possible disruption of the Strait of Hormuz, a key global oil route that handles nearly 20% of global shipments.
Already, more than 150 oil tankers are stranded outside the channel as security risks rise. Shipping firms have begun rerouting vessels around the Cape of Good Hope, which increases travel time, freight charges, and war-risk insurance premiums.
An EU official told Reuters that ships received warnings from Iran’s Revolutionary Guard Corps that “no ship is allowed to pass.” Still, Iran’s Foreign Minister Abbas Araghchi told Al Jazeera that Tehran has no plan “at this stage” to close the Strait.
France’s CMA CGM ordered vessels in the Gulf to halt certain routes. In addition, UK Maritime Trade Operations reported that a vessel near Oman was struck by a projectile, heightening market anxiety.
If crude prices rise to $100 per barrel, Nigeria could earn an extra $29 per barrel at current levels. With production at 1.459 million barrels per day in January 2026, that may translate to about $1.3 billion in additional earnings.
Nigeria depends on oil for over 85% of export earnings and roughly half of government revenue. Therefore, higher prices would strengthen foreign reserves and increase statutory allocations across the three tiers of government.
Oil Windfall May Come with Inflation Shock
Despite the potential revenue boost, households may face immediate pressure. Since petrol subsidy has been removed, global crude increases now pass directly to consumers.
Market watchers estimate that if Brent approaches $120 or beyond, pump prices could climb toward ₦1,200 per litre. That would raise transport fares and push food prices higher.
Dr. Muda Yusuf of the Centre for the Promotion of Private Enterprise said, “Higher global crude prices will translate into higher petrol, diesel and transport costs locally.” He added that the ripple effects could deepen cost-of-living pressures.
Olufemi Idowu, a partner at Kreston Pedabo, explained that even local refineries purchase crude in dollars at international rates. “Fuel prices at home will likely increase, adding to inflationary pressures,” he said.
However, stronger dollar inflows could support the naira. If the exchange rate improves significantly, it may reduce the pace of increase in refined product prices.
Prof. Emmanuel Nwosu of the University of Nigeria warned that fuel prices often rise quickly but fall slowly. “Even if the war is temporary, prices may not fall easily,” he said.
Meanwhile, eight OPEC+ countries have begun unwinding 1.65 million barrels per day in voluntary production cuts first announced in 2023. The group agreed to adjust output by 206,000 barrels per day from April 2026, while retaining flexibility to reverse course if conditions weaken.
Trade, Aviation and Security Concerns Grow
Beyond oil, trade and aviation are already feeling the strain. Several Middle East airlines, including Emirates and Qatar Airways, suspended flights into Nigeria over security concerns.
Dr. Yinka Folami of the National Association of Nigerian Travel Agencies said, “Disruption of flights is not good for us as an industry.” The Federal Airports Authority of Nigeria confirmed that Gulf-bound flights were cancelled and advised passengers to contact airlines for rebooking or refunds.
Logistics operators also warn of rising freight costs due to rerouted vessels and congestion. Dr. Segun Musa of Worldscope International Logistics said, “If vessel traffic reduces, inbound cargo and outbound trade flows will shrink.”
Security concerns are also rising at home. Members of the Islamic Movement in Nigeria staged protests in some northern states following reports of Khamenei’s death.
Jamaluddeen Kabir, Deputy National Youth Leader of the APC, said developments in the Middle East could have indirect security implications for Nigeria. Thousands of Nigerian entrepreneurs operating in the Gulf region may also face disruptions.
Economists caution that oil prices above $150 per barrel could fuel global inflation and slow economic growth. Prof. Adeola Adenikinju observed that uncertainty around the Strait of Hormuz is driving supply fears, although Nigeria’s export routes remain unaffected.
For now, Nigeria may gain from higher crude prices. However, households could soon face higher fuel costs and more pressure on everyday living expenses.
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