Growing tensions in the Middle East, sparked by ongoing military actions involving the United States and Israel against Iran, could lead to a rise in fuel prices in Nigeria, as crude oil climbed to $72.87 per barrel on Sunday.
The escalation followed a major coordinated strike across Iran, including in Tehran, significantly heightening regional instability.
These developments have major implications for Nigeria, where crude oil generates over 85 percent of export earnings and nearly half of government revenue. While higher global oil prices may boost government income—if production levels are optimised they could also result in increased petrol (PMS) prices domestically.
Energy experts say the surge in crude prices presents both opportunities and risks. Oil and gas analyst Ayodele Oni noted that while Nigeria could earn more foreign exchange, higher crude prices would likely translate to higher pump prices.
Similarly, energy expert Kelvin Emmanuel explained that as crude prices rise, government revenue will increase since the 2026 budget benchmark stands at $64.85 per barrel. However, in the post-subsidy era, higher crude costs would force refineries—including Dangote Refinery—to adjust petrol prices based on operational realities.
Economic analyst Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), stated that geopolitical conflicts in the Middle East often trigger oil price spikes due to fears of supply disruptions. He said Nigeria could benefit from increased export earnings, improved foreign exchange inflows, stronger external reserves, and higher FAAC allocations.
However, he cautioned that these gains depend heavily on production capacity. Nigeria’s current output, estimated at 1.4–1.6 million barrels per day, remains below capacity and is affected by oil theft, pipeline vandalism, and underinvestment. Without addressing these issues, the country may not fully benefit from higher prices.
Yusuf also warned of inflationary pressures. Rising fuel costs could increase transportation, food distribution, manufacturing, and logistics expenses—worsening the cost of living. While government revenue may rise, household welfare could decline, creating a gap between fiscal gains and social impact.
Professor Wumi Iledare advised against assuming that the conflict would trigger a prolonged oil shock. He explained that modern oil markets operate on real-time data and rational expectations, and unless there is a sustained supply disruption, price increases may be temporary.
Energy law expert Professor Dayo Ayoade also suggested that prices may not skyrocket dramatically, as many countries maintain crude stockpiles. He noted that even if prices approach $80 per barrel, Nigeria must remain cautious due to existing debt obligations and oil-backed loans.
Ademola Henry Adigun, CEO of AHA Consultancies, said the crisis could further destabilize global oil markets, raising both revenue prospects and petroleum product prices for Nigeria.
Analysts emphasized that to maximize potential benefits, Nigeria must strengthen anti-theft efforts, boost upstream investments, expand refining capacity, and diversify the economy beyond oil. They also stressed the importance of saving excess revenue and protecting vulnerable households from inflation shocks.
Ultimately, experts describe the Middle East crisis as a double-edged sword for Nigeria—offering short-term fiscal gains but posing significant inflationary and economic risks if not carefully managed.
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