The late February of 2026 saw the building of escalation between the United States, Israel and Iran. This rising tension have eventually triggered the sharpest global energy shocks since Russia’s invasion of Ukraine.
As tensions escalate, particularly with the blockade of Iran’s Strait of Hormuz, a choke-point that allows the passage of approximately one-fifth of global oil supply, oil prices have continued to spiked above $100 per barrel in April. For many economies, this crisis signals economic danger. For Nigeria, a deeply import-dependent economy and a net exporter of crude oil; where crude exports account for about 80% of export earnings and remains the major support for its foreign reserves, the resultant consequences to a larger extent presents not only a potential shock, but also a paradox or a classic ”double-edge sword”: Rising crude prices could provide a potential windfalls and readily boost government revenues, strengthen the naira and indeed support the foreign reserves as an economic buffer against shocks while simultaneously worsening inflation, currency volatility, deepen poverty and straining or squeezing living costs for household incomes. Thus, Nigeria as a nation, finds itself at a crossroad. That is, caught between opportunity and vulnerability.
The Director of the African Department at the IMF, Abebe Selassie at a press conference on the Economic Outlook for Sub-Saharan Africa, during the ongoing Spring Meetings of the World Bank/IMF in Washington DC, yesterday, stated that the impact of the ongoing crisis occasioned by the US/Israel-Iran war in the Middle East was already being felt strongly across the region, including Nigeria, with significant pressure on the cost of living.
According to him, ”the immediate effect will be quite a bit of pressure, including on food security, either through the limited availability of fertilizer, expensive fertilizer, or even more immediately, as transportation costs have gone up, it’s going to raise the cost of food and so quite a bit of dislocation. Transportation costs are very high for people in the urban areas, rural areas even more so.” Highlighting the growing strain on households, Selassie stated.
According to Dr. Chike Ofodile, an energy expert cum analyst, ”higher crude prices will ordinarily lead to increased revenue for the country and in addition, support the naira, but the country’s ability to fully exploit this, depends significantly on production capacity. As such, if ”output remains low or constrained, Nigeria may not capture the full advantage of rising prices.”
A casual review of Nigeria’s history will reveal that the managers of the country have unfortunately shown ineptitude in recognising very rare economic opportunities as this one, let alone leveraging on it. Nigeria’s economic history has shown that it lagged the acumen to convert global disruptions into national advantage. For instance, during the 1990–91 Gulf War, oil jumped from $17 to $46, giving Nigeria an estimated $12–13 billion windfalls, but Nigeria could not capture the export realignments created by the Gulf war. Infact, the Pius Okigbo Panel of 19194 later found much of it “could not be properly accounted for”. Again, Nigeria also failed to strengthen gains during the 2008 oil boom and stood aloof and watched as competitors took advantage of the benefits of the Russia-Ukraine energy shock.
Similarly, Finance Minister, Wale Edun said, surging crude “boosts foreign exchange earnings” and strengthens reserves, but warned the shock “intensifies inflationary pressures”. Yet, rising crude prices may not translate spontaneously into immediate respite or reprieve for the mass of Nigerians. This is true because of the country’s ever-dependence on imported refined petroleum products. And since this product is priced and sold at prevailing international market price in a deregulated market, the burden of global shocks is directly pushed to the consumers just as global price increases correspondingly feed into higher domestic fuel costs, consequently pushing up transportation and other operating costs across the country.
Experience in this regard has shown that increased revenue often translates into expanded consumption rather than structural transformation. without fiscal discipline and the judicious allocation of values, increased revenues risk reinforcing the same vulnerabilities that hitherto shocks exposed. That is, growth in GDP or economic growth does not necessarily lead to economic development. Energy expert Odusanya Stevenson said such moments are “double-edged”: higher export revenues but also higher costs for imported fuel, transport, and food.
Further, Development economist, Joseph Arune noted that geopolitical conflicts usually create and transmit inflationary pressures directly to consumers, and by doing so, weakening the consumer purchasing power regardless of the government increased revenues. Nigeria imports most refined petroleum products, fertilizer, and wheat. When crude jumps, landed costs for petrol, diesel, jet fuel, and cooking gas rise. The finance ministry explicitly warned that Hormuz disruption “could raise domestic costs for fuel, diesel, cooking gas and fertilizer”.
Since the Iran war began, petrol prices have surged almost by 50% to ₦1,400/litre, cooking gas has gone up by 30 per cent to N1,500 per kg and diesel over 50% to ₦1,550/litre. The World Bank’s Nigeria lead economist Fiseha Haile said the conflict is “lifting prices but leaving output largely intact,” with inflation risks squeezing incomes.
The National Bureau of Statistics (NBS) announced in its consumer price index (CPI) report on Wednesday that Nigeria’s headline inflation rate increased to 15.38 percent in March 2026, up from the 15.06 percent in February. The increase represents the first in 12 months since the inflation rate started petering down in April, 2025. NBS noted that on a month-on-month basis, the Headline inflation rate in March 2026 was 4.18%, which was 2.17% higher than the rate recorded in February 2026 (2.01%).
NBS further stated that the food inflation rate in March was 14.31 percent on a year-on-year basis. A breakdown of the drivers showed that food, transportation and non-alcoholic beverages remained the biggest contributors to inflation, accounting for 7.55 percent of the headline figure. The rise in the headline inflation which rose from 15.06 per cent in February to 15.38 per cent in March, reflects the full effects of the disruption caused by the Middle East conflict or war on Nigeria’s economy. This is so because before this conflict started on February 28, 2026, crude oil was trading around $70. However, with the Strait of Hormuz becoming unassailable by oil cargoes, crude rose to around $120 per barrel in March 2026. While this rise in price means more revenues for the government, it however puts more economic strains on the citizenry and households.
Concerning exchange rate, capital flow and external buffers, it is instructive to note that geopolitical shocks can reallocate capital flows and heighten fragility. It is therefore not surprising that Nigeria’s FX reserves decreased to 49,296 USD million in March from 49,510 USD million in February and also fell 16 consecutive days to $48.94 billion by April 8, 2026, as the CBN defended the naira amid ”conflict-induced volatility”.
Further, there is also the issue of the rising cost of production and manufacturing. In this regard, the Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadri, warned that ”energy cost escalation is biting hard”, with diesel-dependent factories seeing margins ”wiped out almost overnight.” He stated that the sector’s 3.1 per cent real growth target for 2026 is ”under serious threat.”
It is pertinent to state that every geopolitical stalemate redistributes economic opportunities. The oil embargo and crisis of the 1970s created new energy powers.
The Russia-Ukraine war reshaped global energy alliances. The China-US trade tensions redirected manufacturing flows. Today, the Middle East conflict now threatens to reorder shipping, energy and insurance systems. As such, Nigeria must show the finesse and acumen to foretell structural shifts rather that celebrating revenue windfalls.
Geopolitical conflicts or international crisis have geopolitical implications within global economies and beyond. For ordinary Nigerians, the Middle East conflict has been felt directly in several distressing ways, ranging from; higher petrol prices, rising food and living costs, to increased costs of imported goods and other broader uncertainties.
I will like to state that the current Middle East conflict presents Nigeria with a paradox. This disruption will not crash Nigeria’s economy outright as economic growth is currently projected at 4.1 per cent for 2026, regardless that it would sharpen the trade-off between crude oil revenues and internal stability. On paper, higher crude oil prices ensure more dollars, increased FAAC allocations, stronger reserves and short-term fiscal relief. However, these gains are offset by rising inflation, higher fuel costs, food cost, transportation cost, erosion of purchasing power, financial instability, supply chain disruptions and threaten manufacturing.
In conclusion, it is a fact that Nigeria’s vulnerability to the current crisis lies in its deeply rooted structural flaws, not the war itself— specifically the over-dependence on crude oil exports, inadequate refining capacity, and reliance on imports. This situation If anything, acts as a stark policy warning. Without genuine economic diversification, energy security, plausible domestic production, efficient social security for its citizenry, and the judicious allocation of its resources, Nigeria will perpetually view global shocks as crisis rather than opportunities.
Ultimately, whether this war becomes an economic advantage or a downfall depends less on global events, but by the strength of Nigeria’s internal economic resilience. And as Nigeria’s Minister of Finance, Wale Edun, puts it, ”the shock hits at a critical transition point” for reforms. Whether Nigeria emerges with a stronger balance sheet or with households worse off will depend on three variables: how long the Hormuz closure lasts, how much crude Nigeria can actually produce and export, and how transparently the windfall is managed. The Gulf War of 1991 shows that price spikes alone don’t guarantee prosperity; policy discipline does.”
