NIGERIA is currently benefiting from a price surge as oil prices are forecast to reach $150 per barrel within three weeks if the conflict in the Middle East escalates further and disrupts energy supplies from the Gulf.
Nigeria has its oil price for the 2026 budget estimates premised on $64.85 per barrel, but data from oilprice.com shows that Brent crude currently sells at $88.32 per barrel, which would add more buffer to Nigeria’s net external reserves.
However, this gain for the national coffer will unlikely attract immediate benefits for the nation’s masses who will continue to struggle to purchase petrol and other fuels at high prices.
Currently, petrol sells for approximately N1,000 per liter across Nigeria, following a marginal increase from about N900 it was sold in February.
In his inauguration address on May 29, 2023, President Bola Tinubu suspended fuel subsidy, forcing the price to quadruple.
Nigerians have yet to see many of the promises made by the president with the subsidy savings, as majority of citizens battle with rising poverty and insecurity.
High cost of fuel products translates to more hardships for Nigerians, more overhead costs for businesses, additional spending on petrol for households that rely on petrol to power generators, and increased cost of transportation, foods and other necessities.
Qatar’s energy minister, Saad al-Kaabi, told Financial Times (FT) that a sharp rise in fuel prices could severely damage global economy.
According to the FT, al-Kaabi said a prolonged war in the Middle East could force Gulf energy exporters to shut down production within weeks.
He added that even if hostilities stopped immediately, it could take “weeks to months” for Qatar to restore normal delivery cycles after an Iranian drone strike on the country’s largest liquefied natural gas facility.
The warning comes as the conflict involving the US, Israel and Iran threatens to choke off supply routes critical to global energy trade. Oil markets are increasingly focused on the risk of disruptions around the Strait of Hormuz, a narrow shipping corridor through which roughly one-fifth of the world’s crude and a significant share of global liquefied natural gas passes.
A report by The ICIR shows the Nigerian government would see a significant increase in net external foreign reserves to $55 billion if the conflict, driven by the United States and Israel joint attacks on Iran, last until the end of March, according to some economic watchers.
Already, global oil prices have surged beyond $80 per barrel, driven by disruptions to supply chains across Middle Eastern countries following the conflict.
The net external reserves specifically help stabilise the currency, pay for imports, and service external debts. They also act as a buffer to ensure the country meets its international financial obligations and maintains stability in times of economic uncertainty.
Brokerages have also begun outlining worst-case scenarios if the waterway remains blocked for a prolonged period.
Already, analysts at DBS Bank said crude oil prices could climb to $100-150 per barrel in an extreme scenario involving a full disruption of shipments through the Strait of Hormuz.
According to oilprice.com, Brent crude has already begun reacting to the geopolitical risk. Prices rose sharply this week, climbing as much as to $88.32 per barrel, the highest level since early 2025.
Notably, the escalation in the region has already begun affecting production.
For instance, Iraq, the second-largest producer in the Organisation of Petroleum Exporting Countries (OPEC) group, has reportedly cut output significantly as export routes remain under threat.
The Financial Times also confirmed that Tanker traffic through the Strait of Hormuz was disrupted amid attacks on vessels.
Analysts say the impact of any prolonged disruption would extend well beyond energy markets.
A sustained surge in oil prices would likely raise inflation across emerging economies and slow economic growth.
In Nigeria, the Chief Economist at SPM Professionals, Paul Alaje, warned that petrol prices could climb to N1,000 per litre and push up inflation figures if the conflict is not effectively managed.
“While crude oil goes up, we all need to check the impact on our economy. The first thing you see is high inflation, because as crude oil goes up, the cost of PMS, diesel, and Jet-A1 will also follow.
“As that is going on, about nine per cent has already attracted more cost for PMS in Nigeria, and by the end of April, we project that if the war is not properly managed, it might get to ₦1,000 plus for PMS in Nigeria,” he added.
Higher oil prices typically widen current account deficits for oil-importing economies.
For equity markets, a spike toward $150 oil would likely trigger a broad risk-off reaction. Higher energy costs raise input prices for companies, compress corporate margins and weaken consumer spending.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.