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From Adanna Nnamani, Abuja
Nigeria may be earning more from the recent rally in global crude oil prices, but economists warn that ordinary citizens could face rising fuel costs, higher transport fares and increasing food prices as geopolitical tensions in the Middle East disrupt global energy markets.
Escalating tensions involving the United States, Israel and Iran have triggered volatility in global oil markets, with analysts warning that prolonged disruption to supply routes such as the Strait of Hormuz could push crude prices above $100 per barrel.
While the development could boost Nigeria’s oil earnings, experts say the country’s heavy reliance on imported refined petroleum products means the benefits may not translate into relief for consumers.
Economic and development expert, Dr Aliyu Ilias, noted that although higher oil prices can increase government revenue, citizens often bear the burden through rising fuel prices.
“When the price of crude oil increases, Nigeria should ordinarily benefit because we are an oil-producing country. But the reality is that while government earns more revenue, citizens pay more because we do not refine enough of our fuel,” he said.
According to him, some filling stations have already begun adjusting pump prices, with petrol reportedly selling as high as N1,350 per litre in some locations. He explained that once fuel prices rise, transportation costs inevitably increase, pushing up the prices of goods and services across the economy.
“Anything that affects transportation will affect goods and services, especially food items that have to be transported from farms to markets. That will ultimately drive inflation,” he added.
Professor of Economics and Public Policy at the University of Uyo, Akpan Ekpo, also warned that the spike in global oil prices could worsen inflationary pressures and deepen the cost-of-living crisis.
“The spike in global oil prices will result in rising inflation and affect the cost of living. Transport prices will increase, airfare will increase, and virtually all sectors of the economy will feel the impact,” he said.
Ekpo suggested that in the short term, government may need to import food to cushion the impact of rising prices, while long-term solutions should focus on boosting agricultural production and addressing insecurity affecting farming communities.
Similarly, Group Managing Director of Bristol Investments Limited, Dr Chijioke Ekechukwu, said government can still mitigate the impact by stabilising domestic fuel supply.
According to him, Nigeria can reduce the pressure on petrol prices by ensuring crude supplied to local refineries is sold at controlled prices instead of international market rates.
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“We are an oil-producing country and we can ensure that crude supplied to our refineries is sold at controlled prices. If this is done, petroleum product prices can remain relatively stable in Nigeria,” he said.
However, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, cautioned that expanding domestic refining alone may not significantly lower petrol prices in Nigeria.
Yusuf explained that because crude oil feedstock for refineries is priced using international benchmarks and denominated in U.S. dollars, local refining cannot completely shield the country from global price fluctuations.
“Crude oil feedstock for refineries is priced using international benchmark prices and denominated in U.S. dollars, irrespective of the location of the refinery. Even crude supplied by local producers or the national oil company is priced using international crude oil benchmarks,” he said.
He added that domestic refineries typically pay an additional premium of between $3 and $6 per barrel to secure crude supply.Meanwhile, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has stressed the urgent need to strengthen Nigeria’s domestic refining capacity by ensuring adequate and consistent crude oil supply.
The association’s National President, Dr Billy Gillis-Harry, expressed concern over the escalating military tensions involving the United States, Iran, Israel and allied nations, noting that the conflict has disrupted global energy markets and supply chains.
The association warned that tensions around the Strait of Hormuz, a strategic route through which about 20 per cent of the world’s crude oil supply passes daily, have heightened uncertainty in global energy markets.
According to the association, the hostilities have already disrupted key energy facilities in the region, including the Ras Tanura refinery in Saudi Arabia and liquefied natural gas production sites in Qatar, causing sharp volatility in international energy prices.
PETROAN said the development highlights the vulnerability of Nigeria’s domestic petroleum market, which still depends heavily on imported refined products.
Gilllis-Harry therefore urged the Federal Government to accelerate efforts to strengthen domestic refineries, particularly through the provision of consistent crude oil supply and improved governance structures.
He also endorsed efforts to revive the Port Harcourt Refining Company and recommended adopting the governance model used by Nigeria LNG Limited (NLNG) to enhance operational efficiency, transparency and long-term productivity.
Meanwhile, the Federal Government has said it is closely monitoring the escalating geopolitical tensions in the Middle East and their potential implications for Nigeria’s economy.
The Economic Management Team (EMT), chaired by the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, recently met to assess the possible economic impact of the crisis.
According to a statement signed by the Assistant Director of Information and Public Relations at the Ministry of Finance, Mrs Uloma Amadi, the government has identified three major transmission channels through which the crisis could affect the Nigerian economy.
These include volatility in crude oil and gas prices, shifts in capital flows and financial market conditions, as well as disruptions to global logistics and supply routes that could increase international freight costs.
The ministry noted that sustained instability in the Middle East could lead to rising domestic prices of fuel, diesel, cooking gas and fertiliser, thereby placing further pressure on inflation and the cost of living.
However, the government said Nigeria is entering the period of global uncertainty with strengthening economic fundamentals, pointing to real GDP growth of 4.07 per cent in the fourth quarter of 2025 as one of the strongest quarterly performances in over a decade.
It added that the Economic Management Team will continue to coordinate fiscal, monetary and energy policies to mitigate the impact of external shocks and protect households and businesses.
For many analysts, however, the situation once again shows the paradox of the nation’s oil-dependent economy, where rising crude prices may boost government revenue but deepen the financial strain on citizens already grappling with rising living costs.
