Nigeria could earn an extra $1.3 billion in crude sales in March as spiralling Middle East tensions threaten to trigger a supply shock that may see prices rally to $100 to $150 per barrel amid widespread fears of a possible disruption of the Strait of Hormuz.

Fiscal gain, however, may cause a significant short-term shock to household income, with fear that pump prices of petroleum products, especially premium motor spirit (PMS), may rally to N1,200 per litre.

This comes as stakeholders also insist that a protracted conflict could rattle global trade, stoke recession for many economies, and cause significant financial strains on struggling households, especially in economies where social support is weak.

The heightened tension may trigger dumping of risky assets and capital flight from emerging markets as investors prioritise safety over return. There are fears that the stock market, which has had a significant bull run since the beginning of the year, could see significant profit-taking in the coming weeks and the exit of foreigners.

Following the invasion of Iran by Israel and the United States, the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei and escalating attacks across Middle East, especially United Arab Emirates (UAE), Saudi Arabia, Qatar and Bahrain, global shipping routes, particularly in the Persian Gulf have already faced disruption with over 150 oil tankers already stranded outside the Strait of Hormuz.

The crisis is causing a ripple effect across the globe. In Nigeria, members of the Islamic Movement in Nigeria (IMN) yesterday staged protests in some northern states over Khamenei’s death, a development which stakeholders insisted has far-reaching security implications and a spiralling humanitarian crisis for a stressed and lean United Nations (UN).

Shipping sources had confirmed to Sky News that at least 150 oil tankers were waiting outside the Strait amid mounting security concerns, while several international carriers have suspended or rerouted vessels.

France’s CMA CGM, the world’s third-largest container shipping line, has reportedly instructed vessels in the Gulf to take shelter and halt certain routes.

development escalates, the sources said some vessels are diverting around the Cape of Good Hope, increasing journey times, freight charges and war-risk insurance premiums.

The UK Maritime Trade Operations (UKMTO) also reported that a vessel north of Oman and east of the Strait had been struck by an unknown projectile, further heightening market anxiety.

An official of the European Union told Reuters that vessels transiting the Strait have received very high frequency transmissions from Iran’s Islamic Revolutionary Guard Corps, warning that “no ship is allowed to pass”.

Amidst the tension, Iran’s Foreign Minister Abbas Araghchi told Al Jazeera that Tehran has no intention “at this stage” to close the Strait or disrupt navigation.

Nigeria has been struggling to sell its crude oil as Platts cited a document from the Nigerian National Petroleum Company Limited, which was dated February 26, to show the company lowered the Nigerian NNPC Selling Prices (NSPs). By implication, four of the 37 grades of NSPs saw a rise month-over-month.

Yesterday, most Nigerian grades were unusually trailing Brent at $71 per barrel oil price.

As Africa’s largest crude exporter, Nigeria depends on oil for over 85 per cent of export earnings and roughly half of government revenue. A sustained rise in prices directly strengthens fiscal receipts, foreign exchange inflows and statutory allocations to the three tiers of government.

But a sharp increase in crude also means an upward rise in prices of refined products. With subsidy fully removed from the downstream market, a rise in crude also means paying more for PMS and other by-products, which is an upside risk to inflation.

Nigeria’s crude production rose to 1.459 million barrels per day in January 2026, according to official submissions to the Organisation of the Petroleum Exporting Countries (OPEC). At current output levels, a sharp upward swing in global prices could translate into substantial additional export earnings in the short term.

The rise, if the price eventually jumps to $100 per barrel, according to stakeholders, would see Nigeria earn an additional $29 per barrel, which may translate to about $1.3 billion in future earnings.

The geopolitical uncertainty also comes as eight OPEC+ countries, including Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria and Oman, yesterday began unwinding 1.65 million barrels per day of voluntary production cuts announced in 2023.

The group agreed to a production adjustment of 206,000 barrels per day effective April 2026, while retaining flexibility to reverse course if market conditions deteriorate.

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Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said higher crude prices would boost export receipts and external reserves but cautioned that gains depend on Nigeria’s ability to sustain output at between 1.4 and 1.6 million barrels per day. That would mean de-risking against persistent oil theft, pipeline vandalism and underinvestment.

Yusuf warned that while government revenues may improve, domestic inflationary pressures would intensify under the deregulated petroleum pricing regime.

“Higher global crude prices will translate into higher petrol, diesel and transport costs locally. The knock-on effects on food prices and manufacturing will deepen cost-of-living pressures,” he said.

Market watchers estimate that if Brent crude approaches $120 or beyond, pump prices of PMS could climb towards N1,200 per litre, particularly as import parity benchmarks adjust upward.

Nigeria no longer operates a petrol subsidy regime, meaning refiners and importers purchase crude and refined products at prevailing international prices and pass attendant costs to consumers.

Partner at Kreston Pedabo, Olufemi Idowu, noted that although refineries such as the Dangote Petroleum Refinery source crude locally from NNPC Limited, transactions are conducted in dollars at international rates.

“Rising crude prices will increase domestic refining costs. Fuel prices at home will likely increase, adding to inflationary pressures,” he said.

But the change in the nominal price of PMS or any other derivative comes with a complex costing system. If more dollar earnings significantly strengthen the naira, the exchange rate gain could also reduce the rate of increase in the finished products.

Managing Partner at Nextier, Prof. Ndu Nwokolo, said markets respond more to uncertainty than risk and that the proxy nature of the conflict, with potential strikes on Saudi Arabia, the UAE, Qatar and Bahrain, heightens volatility.

“If any oil infrastructure is hit, uncertainty will increase further and prices will spike. Nigeria will earn more from crude sales, but local pump prices will also rise,” he said.

With regime changes ahead and uncertainty over the development, economists warned that prolonged disruption could trigger a broader global economic slowdown, insisting that oil prices above $150 per barrel could fuel inflation across advanced economies, raise borrowing costs, dampen global demand (ultimately weakening oil consumption) and lead to imported inflation in emerging economies.

An economist at the University of Nigeria, Prof. Emmanuel Nwosu, referenced the Rocket and Feathers hypothesis, which suggests that fuel prices rise quickly when crude increases but fall slowly when crude declines.

“Even if the war is temporary, prices may not fall easily. Marketers may adjust pump prices upward quickly, even before full transmission effects are felt,” he said.

He urged regulators to guard against opportunistic pricing behaviour in the domestic market.

Principal Facilitator at FUPRE Energy Business School, Professor Wumi Iledare, urged caution against treating the conflict as a repeat of historic oil shocks.

“This is not 1973. Today’s market is more diversified and responsive. Unless there is sustained physical supply loss, price spikes may not be permanent,” Iledare said.

advised the Nigerian government to save any windfall revenue above the budget benchmark, warning that oil prices are historically volatile and mean-reverting.

Former President of the Nigerian Economic Society, Prof. Adeola Adenikinju, has also said the escalating war will push global oil prices higher as markets react to supply fears.

Adenikinju noted that uncertainty surrounding the Strait of Hormuz, which accounts for nearly 20 per cent of global oil shipments, is driving scarcity sentiments in the market.

According to him, the duration of the price surge will depend on how quickly peace returns to the region. A prolonged conflict could sustain elevated prices.

For Nigeria, he said, higher crude prices would boost export earnings, as the country’s oil routes are not directly affected. Traders may even substitute Nigerian crude for disrupted supplies.

Meanwhile, security analysts expressed concern about domestic repercussions as members of the Islamic Movement in Nigeria reportedly staged protests in parts of the North following reports of the killing of Iran’s Supreme Leader, Ayatollah Ali Khamenei.

eputy National Youth Leader of the All Progressives Congress, Jamaluddeen Kabir, said developments in the Middle East could have indirect security implications for Nigeria, particularly given religious and geopolitical sensitivities.

He added that thousands of Nigerian entrepreneurs operate across the Gulf region and could face disruptions to business operations.

Logistics operators are already reporting secondary effects and warned that rerouted vessels and congestion in Gulf waters could disrupt supply chains.

Managing Director of Worldscope International Logistics Limited, Dr Segun Musa, said: “The Middle East corridor is a strategic artery linking Africa with Asia and Europe. If vessel traffic reduces, inbound cargo and outbound trade flows will shrink, affecting government revenue tied to imports.”

Impact on capital market, trade and shipping

While Nigeria remains heavily dependent on imported finished goods and industrial raw materials from Asia and the Middle East, stakeholders said extended shipping delays could raise input costs for manufacturers and exacerbate inflation.

Tension is also growing in the aviation space over the cascading effect. While Emirates, Turkish and Qatar Airways and other major airlines that operate daily flight services to multiple international airports in Nigeria have suspended flight services, aviation experts are worried over the multiplier effect.

A source close to the Nigerian Airspace Management Agency (NAMA) said the affected airlines did not operate into Nigeria on Saturday, even as there is a possibility of further disruption.

The Managing Director of Travelden, a subsidiary of Finchglow Holdings, Gbenga Onitilo, warned that continued disruption could have a negative impact beyond passenger inconvenience.

Onitilo noted that the suspension of Middle East flights could add economic pressures in Nigeria and some other countries.

He noted that with the escalation of the war, Jet A1, insurance premium and tourism would be heavily affected.

Onitilo also cautioned that stock market volatility could worsen, particularly in banking and consumer goods segments, stressing “Nigerian government revenue may experience higher volatility, with oil gains potentially being offset by increasing public expenditure”.

The President of the National Association of Nigerian Travel Agencies (NANTA), Dr Yinka Folami, confirmed that the Middle East carriers flying into Nigeria had suspended flight services into the country.

He lamented that flight disruption was not good for the industry, especially for airlines and passengers with hubs and stopovers, respectively, in the Middle East.

“Our passengers were affected by this crisis because airlines have started turning passengers back home. Just on Saturday, Qatar Airways asked passengers to disembark and return home because the airspace had been shut. There are dangers in the airspace and you know safety is paramount in aviation.

“Disruption of flights is not good for us as an industry. For those who have to hub in the Middle East and beyond, it will affect them seriously,” he said.

Also, the Federal Airports Authority of Nigeria (FAAN) in a travel advisory on Saturday, confirmed that Middle East-bound flights, particularly those operated by Gulf carriers, had been cancelled.

FAAN urged affected passengers to contact their airlines for updates on rebooking, refunds and alternative travel plans.

As tensions and violence escalate, concerns about the extent of the war and damage it would leave remains priority in the minds of people.

For a lecturer in the Department of History and Strategic Studies, University of Lagos (UNILAG), Prof. David Aworawo, any major conflict of this scale inevitably destabilises the international system and negatively affects development in a globalised world.

He explained that global instability hampers economic growth and impacts all countries, whether directly involved or not. He said that while a few countries, particularly oil producers, might benefit from rising oil prices, the overall global impact of the conflict would be negative.

He stated that oil-producing African countries such as Nigeria and Angola could see increased revenue if prices rose. However, he warned that inflation induced by the conflict would have adverse effects on the international system, reducing the overall benefits of higher oil earnings.

He said the conflict could also have indirect social consequences in countries with religious divides, such as Nigeria, where tensions might rise if the war deepened sectarian sentiments. He emphasised that although some nations might gain economically in the short term, many countries would suffer negative economic consequences.

He recalled that Nigeria benefited economically from the Arab-Israeli conflict in the 1970s, particularly during the Yom Kippur War, when oil revenues increased significantly. He noted that despite that historical precedent, the broader impact of the current conflict would likely be harmful to most countries, as global inflation and instability would outweigh the gains experienced by a few oil-producing states.

Head, Security and Strategic Studies Division, Research and Studies Department at the Nigerian Institute of International Affairs (NIIA), Prof. Joshua Bolarinwa, said the conflict in Iran is aimed at establishing a new government different from the Ayatollah’s regime that has been in place since 1979. He stated that many Iranians had been against the alleged government for decades and were now demanding change and that the actions of the United States and Israel could provide Iranians with an opportunity to have the kind of government they desired.

He added that for over four decades, the leadership had focused more on preaching against the United States and Western powers than on improving the lives of ordinary Iranians.

He argued that the government had failed to promote Islamic tenets in a way that fostered understanding and development, instead promoting hostility toward other civilisations.

On the implications, he explained that Iran is regarded as the headquarters of Shia Muslims worldwide, while Saudi Arabia holds a similar position for Sunni Muslims, making the conflict sensitive in religious terms.

He stated that the situation could reshape religious and political dynamics in the Middle East, potentially leading to greater regional instability.

He also said the conflict would have economic consequences, particularly for global oil prices, because Iran is a major oil producer. He added that disruptions in supply could affect prices on the international market.

He said Nigeria might benefit economically if the situation was properly managed, especially in terms of oil sales and revenue, but warned that outcomes would depend on how the crisis unfolded.

Head, Early Warning System Centre, NIIA, Dr Omotola Ilesanmi, said the situation surrounding the U.S. and Iran was unfortunate, stating that different parties to the conflict have their own justifications.

She said that for the United States, its justification is that Iran is seen as a rogue nation and should not have access to nuclear weapons because allowing it to develop such a capability poses a threat to global security.

She, however, condemned America’s actions, saying it violates international law, adding that such precedents in international affairs signal a return to an era where “might is right,” meaning that countries may act unilaterally simply because they possess the capability to do so. She said this raises concerns about global stability, asking what would stop China from attacking Taiwan tomorrow under similar reasoning.

Ilesanmi said the approach being adopted sidelines the United Nations and ignores established procedures for addressing international conflicts. She stated that there is a procedural way such disputes should be resolved.

She said that although the conflict may appear regional, its implications are global. She stated that if Iran’s Supreme Leader is eliminated along with key members of the leadership council, it could amount to regime change. She said while such an outcome might end the conflict swiftly, it would come at the cost of global norms and international law. (The Guardian)

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