Dispatch Rider: ‘’Good afternoon madam, I am a dispatch rider and I have a message to deliver to you. Your bill is N4000.”
Lady shopowner: ‘’why? From GARKI TO Asokoro should not be more than N3000’’
Dispatch Rider: “Madam, fuel price has increased.”
Above short conversation ensued between a dispatch rider and a shop owner in Asokoro penultimate Saturday in Abuja. That signaled the nature of yet another precarious situation looming. Just as this writeup was being put together, the airwaves bubbled with reports of another round of price adjustments by Dangote Refinery to N1,175 and N1,620 gantry price per litre of premium motor spirit (petrol) and Automotive Gas Oil (diesel) respectively.
The ongoing conflict in the Middle East, if it is prolong, has very high potential to affect global energy market vis-a-vis prices and socioeconomic conditions in general, thereby placing new demands on policymakers. Kristalina Georgiva of the International Monetary Fund (IMF) succinctly drove the points home when she said: “Middle East conflict is testing resilience, potentially denting sentiment, growth and inflation.”
From economic perspective, the implications are alarming. One of the immediate fallouts of the hostilities is the rise in crude oil price to over $100 per barrel at the international market and the hike in the cost of petrol in Nigeria to over N1,400 in many parts of the country.
The Middle East is not merely a regional theatre; it is an artery of the global economy. The Strait of Hormuz remains one of the world’s most critical oil transit routes. Any prolonged disruption reverberates globally. Oil price volatility fuels inflation. Inflation destabilizes fragile economies like ours. For a developing economies, particularly energy-import dependent nation like Nigeria, bear disproportionate burdens.
Nigeria must watch closely because while higher oil prices may temporarily increase revenue inflow, global instability often affects the supply chain, reduces overall demand, disrupts remittances, and increases import costs. Transportation costs, prices of agricultural and manufacturing inputs, aviation fueland food imports are all linked to global energy stability. A war in the Middle East does not remain in the Middle East. It travels invisibly wider through markets and foreign exchange rates.
The glad tidings are that rising prices could boost reserves, improve forex liquidity, strengthen the naira, and ease fiscal pressures. In theory, this external cushion could support macroeconomic stability and reinforce the central bank’s currenteasing posture.
However, the upside is constrained by structural weaknesses inherent in the Nigerian economy. Nigeria’s oil production remains below optimal capacity. A significant portion of crude exports is tied to long-term contracts, limiting immediate gains from spot price surges.
More critically, Nigeria’s dependence on imported refined products exposes it to imported inflation. Rising global crude prices increase the cost of petrol, diesel, jet fuel and gas. With subsidies removed, these increases are passed directly to consumers and businesses as market driven price determinant.
In all these, Nigeria’s teeming masses are at the receiving end. Citizens are not only gittery but already seeing and feeling negative impact of the crisis. A research presented at a recent stakeholders’ dialogue organised by Agora Policy in Abuja showed that the national poverty headcount rose sharply from a baseline of about 49.8 per cent to roughly 63 per cent, about 139 million live below poverty line.
Businesses are not insulated from the disruptions caused by the crisis with the high energy cost, inflationary pressure and resultant low demand.
Crude oil, the key input in refining, recently surged from about $65 per barrel to over $112 per barrel within weeks, pushing up the cost of petrol, diesel, aviation fuel and liquefied petroleum gas globally. Because petroleum products are traded within an integrated global market, fluctuations in crude oil prices are inevitably transmitted to domestic fuel prices in most economies, including Nigeria.
A Nigerian Economic Think-tank, Nigerian Economic Summit Group (NESG), in its latest report titled “Boom, Not Gloom,” the NESG said the escalating tensions involving the United States, Israel and Iran present a “time-limited opportunity” for Nigeria to strengthen its fiscal position, provided it avoids the spending excesses that characterised previous oil booms. The group posited that Nigeria could reap as much as N30 trillion in additional oil revenue if the ongoing conflict in the Middle East push global crude prices to $130 per barrel.
According to the a new policy brief by the group, the development could hand government’s largest fiscal windfall in years, but warned that it could also pose significant political and policy risks as the country approaches the 2027 general elections.
On policy side, the recent decision of the Central Bank of Nigeria ((CBN) to reducing the benchmark rates based on the relative stability in the economy is now being put to test. The Bank cut the rate by 50 basis points to 26.5 percent from 27 percent, which has been widely described as a cautious transition from prolonged tightening to calibrated easing. The CBN stated that the decision followed 11 consecutive months of disinflation.
Economic analysts strongly believe that the sustainability of these gains is now being tested by forces far beyond the apex bank’s policy corridors. This is as a result of the direct ripple effect of the escalating conflict in the Middle East , has triggered one of the most significant geopolitical energy shocks in decades.
For Nigeria, the timing is delicate. Just as the CBN signals confidence in disinflation and stability, global volatility threatens to complicate and possibly distort its monetary path. The rate cut, though a welcomedevelopment, the prevailing situation in the country tends to defies all logic because despite the perceivedimprovements, inflation and high cost of living remain sources of concern.
The CBN Governor, Olayemi Cardoso has assured Nigerians that the ongoing macroeconomic reforms have strengthened the country’s buffers against shocks from global crises, including the US-Iran conflict. He highlighted improved foreign exchange market efficiency, rising capital inflows, and external reserves surpassing $50 billion.
Good news indeed. The good thing is that rising oilprices could boost reserves, improve forex liquidity, strengthen the naira, and ease fiscal pressures. This external cushion could support macroeconomic stability and reinforce the easing posture.
However, the downside is constrained by structural weaknesses. Nigeria’s oil production remains below optimal capacity while the country remains a price taker in an oligopolistic market. A significant portion of crude exports is tied to long-term contracts, limiting immediate gains from spot price surges. As succinctly described by an indigenous renowned research outfit, SB Morgen (SBM), that “Nigeria’s “windfall” is volatile and limited by soft production performance.’’
More critically, Nigeria’s dependence on imported refined products exposes it to imported inflation. Rising global crude prices increase the cost of petrol, diesel, jet fuel and gas. With fuel subsidies removed, these increases are passed directly to consumers and businesses.
Above developments are enough to give policy makers of serious concerns. In the case of Nigeria, the Economic Management Team (EMT) has serious job cut out for it. The team needs to keep tab of developments in the Gulf region vis-a-vis oil market to see how best to take advantage of the expected windfall while minimising the negative effects of the crisis on Nigerians.
Government based the 2026 budget on $64.85 for a barrel of crude, Nigeria’s main export. The dilema now is that crude prices are well above $100 per barrel already and if the crisis does not abate in the next few weeks it could hit $120. Of course, that means more revenue or windfall for Nigeria. However, it could also precipitate further rise in the pump price of petrol and cost of living generally. A big challenge at the door steps of the Economic Management Team (EMT) indeed.
The Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, has expressed concerns that the ongoing conflict in the Middle East could disrupt Nigeria’s economic recovery and distort the cautious optimism surrounding the country’s recent gains in stabilizing the Naira and reducing inflation.
Such concerns are rooted in the inflationary threat, fuel and energy costs as petrol and diesel pump prices are already about N1,400 and N1,700 respectively across the country. The geopolitical instability and its subsequent effect on global financial conditions would complicate the apex bank’s benchmark rate decisions, making it difficult to maintain the current trajectory of stabilization.
For international observers, for Nigeria today,represents both a challenge and an opportunity. With more than 220 million people, blessed with some of Africa’s largest energy reserves, the country occupies a strategic position in the global energy conversation.
Yet the lessons of history remain close at hand.
Taking a cue from a recent exhortation by the British Monarch , King Charles urging Nigeria to Take her rightful place in the scheme of things, all hands must be on the deck to pull the country of socio-economic doldrums According to the Monarch, “Your nation, is an economic powerhouse, a cultural force and an influential diplomatic voice from a continent that is playing an increasingly important role in the world. In a vastly interconnected global environment, one that is changing at unimaginable speed, that leadership brings responsibility – and opportunity.”
The above statement challenges our collective leadership acumen at a time like this especially now that another oil windfall seems to be here again. The pertinent question is how do we spend the anticipated largesse this time around?
One priority is fiscal discipline. Institutions such as the Nigeria Sovereign Investment Authority and the Excess Crude Account were originally designed to capture excess oil revenues during boom periods and cushion the economy during downturns. Strengthening these buffers would improve macroeconomic stability and reassure investors that Nigeria is preparing for future volatility.
Another area of focus is debt management. Nigeria’s public debt has risen steadily in recent years, and servicing costs consume a growing share of government revenues. Using part of any windfall to reduce debt obligations would ease fiscal pressure and create room for more productive investment.
But perhaps the most strategic opportunity lies within the energy sector itself.
Despite its vast crude reserves, Nigeria has historically struggled to build sufficient domestic refining capacity. Expanding refining, gas processing, and petrochemical industries would allow the country to capture far greater value along the energy value chain. For investors, these sectors represent some of the most promising frontiers in evolving energy landscape.
Infrastructure investment also remains critical. Efficient transportation system, efficient portsoperation, and industrial clusters can help unlock growth across agriculture, manufacturing, and technology sectors. Diversification has been a recurring topic in Nigeria’s economic policy debates, and windfall revenues offer a rare chance to accelerate that transition.
At this point in time, deliberate and massive investment in power, roads, and digital infrastructure to support manufacturing and business competitiveness.
Of equal importance is to address security challenges to improve agricultural productivity and reduce food inflation. Of recent, two ugly incidents Nigeria have been listed among the world’s deadliest incidents, according to the 2026 Global Terrorism Index. This does not augur well for the wellbeing of the citizens and prospective investors.
Transparency which has been the bane of oil industry should be given serious attention so that an agency such as the Nigeria Extractive Industries Transparency Initiative (NEITI) plays vital roles in ensuring that revenues from natural resources are tracked, audited, and publicly reported. Clear governance frameworks build investor confidence and reinforce Nigeria’s credibility in global space.
The windfall of the early 1990s could have reshaped Nigeria’s economic path as it ought to have strengthened institutions, expanded infrastructure, and accelerated industrial development. Instead, it became a cautionary tale about the risks of unmanaged resource wealth.
Today, circumstances are different. Nigeria has stronger institutions, deeper capital markets, and a generation of policymakers increasingly aware of the need for fiscal discipline and economic diversification.
Whether that awareness translates into action will determine how this moment is remembered.
For investors, policymakers, and energy leaders around the world, Nigeria’s next chapter will offer a revealing case study. If managed carefully, a temporary surge in oil revenues could become the foundation for broader economic resilience. Afterall w
indfalls, are transitory. What endures are the investments, institutions, and policies built from them.
