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By Chinwendu Obienyi
Nigeria’s private sector could face mounting pressure or strain in the second quarter of 2026, following the spike in global energy prices linked to escalating Middle East tensions which have constantly driven up costs and weakened consumer demand.
This revelation came after a report by Africa-focused geopolitical research firm, SBM Intelligence, titled “How a Middle East War Broke Nigerian Pockets,” showed that businesses are already adjusting expectations downward, with 62.7 per cent of surveyed traders anticipating adverse effects on their operations over the next three months.
“62.7 per cent of the traders said it would harm their business. Another 13.6 per cent said it might help (by inflating the value of goods they already hold). Only 6.8 per per cent foresaw no impact, and 16.8 per cent were uncertain. Among those expecting harm, the main worry was that goods would become too expensive to buy (34.5 per cent of all respondents)”, the report stated.
The conflict, which began with direct military escalation between the United States, Israel and Iran, triggered a sharp rise in crude oil prices, pushing Brent above $110 per barrel from around $82. Given Nigeria’s reliance on imported refined petroleum products, the pass-through effect has been immediate and pronounced.
Retail fuel prices in major cities have surged, with Lagos seeing petrol climb from about N830 per litre in late February to over N1,300 by March.
Transport fares have followed suit, while logistics costs have risen across supply chains, feeding into higher prices for food, manufactured goods and services.
For many businesses, the challenge is no longer just supply disruption but shrinking consumer purchasing power.
Traders surveyed by SBM Intelligence cited the rising cost of goods as their primary concern, ahead of scarcity.
According to them, goods are becoming too expensive for customers to afford, highlighting a shift toward demand-side stress.
The inflationary pressures are already influencing operational decisions. Small and medium-sized enterprises, which dominate Nigeria’s informal economy, are scaling back inventories, reducing transportation frequency and substituting higher-cost inputs with cheaper alternatives.
Some traders have begun pooling resources to achieve bulk purchasing efficiencies, while others are downsizing operations altogether.
“These adjustments reflect a defensive posture,” SBM Intelligence said, adding that in some cases traders are delaying restocking entirely, a behaviour that could eventually tighten supply if sustained across the market.
Despite Nigeria’s status as an oil-producing country, structural vulnerabilities continue to amplify external shocks. The absence of a strategic fuel reserve, combined with limited domestic refining capacity and import dependence for key goods, leaves the economy exposed to global price cycles.
The report also points to Nigeria’s exposure to international shipping routes passing through strategic chokepoints such as the Strait of Hormuz, where tensions have increased insurance and freight costs. These, it said, added costs ripple through imports ranging from food staples to industrial inputs.
Business sentiment captured in the survey suggests broad-based pessimism. While a small portion of respondents expect potential gains from higher inventory valuations, the overwhelming majority foresee margin compression and weaker sales in the near term.
In response, SBM Intelligence has called on the FG, urging it to establish immediate “shock absorbers” to cushion the economy from further volatility.
“Key recommendations include the creation of strategic fuel reserves to stabilise pump prices during global spikes, improved market intelligence systems to provide traders with real-time pricing and logistics data, and the diversification of import routes away from geopolitically sensitive corridors”, it said.
The firm also called for medium-term investments in rail freight infrastructure to reduce dependence on diesel-powered road transport, alongside the establishment of commodity buffer stocks for essential goods such as rice and cooking oil to help moderate price swings.
Without such measures, the report warns that Nigeria will continue to experience rapid transmission of external shocks into domestic markets, with each escalation in global tensions translating into higher costs for businesses and households alike.
With the second quarter already underway, firms are bracing not for a sudden collapse, but for sustained pressure on margins, demand, and operational capacity, conditions that could reshape the country’s near-term growth outlook if global energy volatility persists.
