The fresh wave of geopolitical tensions in the Middle East may soon translate into higher fuel prices in Nigeria, analysts say, as global oil markets react to Israel’s recent airstrikes on Iranian nuclear facilities.
Oil prices spiked sharply after the strikes, which also reportedly killed senior Iranian military commanders. The escalation marks a significant turning point in the longstanding hostilities between the two nations.
According to Bloomberg, Brent crude soared by as much as 13% in intraday trading—the largest jump since March 2022 before settling at a 7.6% gain.
Meanwhile, global financial markets reflected the volatility, with S&P 500 futures slipping 0.9% and gold climbing 1% to its highest in over a month, as investors sought safe havens.
Speaking to Naijaonpoint, Jide Pratt, Country Manager of TradeGrid and COO of Aiona, emphasized the direct connection between Middle Eastern instability and fuel prices in Nigeria.
“Iran, being a major oil-producing nation, is a trigger for the prices of crude oil,” Pratt explained. “As such, with the bombing, the immediate effect we see is that prices of Brent have gone up to $78 and now about $73 as an immediate reaction.”
He added that, should tensions escalate further, the consequences could be even more severe. “If this escalates, then the prices will go up and so will the prices of distillates here in Nigeria and across the world.”
“Pratt also pointed out that Nigeria’s volatile foreign exchange rate could worsen the domestic impact. “What makes it worse will be if we do not keep our exchange rate consistent and constant,” he said.
“While the oil price spike may bring increased revenue to the Nigerian government, analysts stress the need for prudent financial management. “In all, more revenue for the Federal Government and states—if they spend it in a frugal way,” Pratt noted.
Energy economist Edwin Eze of the Abuja-based Centre for Energy Policy also noted, “For Nigeria, that could mean an increase in landing costs and ex-depot prices, which may eventually be passed on to consumers.”
Although the Federal Government has maintained that fuel subsidy removal will allow prices to reflect market realities, the timing of another potential hike is likely to stir public discontent, especially amid existing economic hardship and inflationary pressures.