By By Elizabeth Ugbo
Nigeria could earn higher oil revenue as tensions rise between the United States, Israel, and Iran, but consumers may face higher petrol and diesel prices if crude climbs above $90 per barrel. The hostilities escalated after coordinated strikes on Iran by the US and Israel, triggering retaliation and market panic. Analysts in Lagos told News Point Nigeria that global oil prices reacted sharply over the weekend. Brent crude surged nearly 10 percent before settling at $72.87 per barrel by 10 pm Sunday. West Texas Intermediate traded at $67.02, while Nigeria’s Bonny Light stood at $78.62. Experts say prices could spike further if the conflict disrupts supplies through the Strait of Hormuz.
Global Oil Prices React to Middle East Tensions
The crisis has rattled global oil markets. Traders fear supply disruptions in the Gulf region.
The Strait of Hormuz handles over 20 percent of global oil shipments. Any blockage could trigger sharp supply shocks. Consequently, analysts warn that crude could approach or exceed $90 per barrel.
Although OPEC+ members announced a modest production increase, concerns persist. The alliance, which includes Saudi Arabia and Russia, plans to raise output by 206,000 barrels per day in April. However, experts doubt this will offset major shipping disruptions.
Higher Revenue for Nigeria, But At a Cost
Nigeria relies heavily on oil exports for foreign exchange earnings. Therefore, higher crude prices could boost government revenue and ease fiscal pressure.
However, the benefits may not reach ordinary Nigerians. Petrol prices already range between N824 and N880 per litre across major cities. Logistics and regional factors influence these variations.
The Dangote Petroleum Refinery recently reduced its gantry price from N799 to N774 per litre. Despite that cut, experts warn that rising crude prices could reverse the relief.
Why Petrol Prices Remain Vulnerable
Energy analysts argue that Nigeria’s pricing structure remains exposed to global volatility. The Dangote refinery imports a significant share of its crude feedstock.
Industry data shows the refinery processes about 18 million barrels monthly. Roughly 12 million barrels come from imports, while about 5.7 million barrels come from the Nigerian National Petroleum Company Limited.
As a result, any spike in global crude prices affects refining margins. Furthermore, rising war-risk insurance premiums on oil tankers could increase landing costs. Refiners may then adjust pump prices upward.
Analysts add that about 40 percent of refined products consumed locally are still imported. This reliance weakens Nigeria’s insulation from global shocks.
Subsidy Removal Limits Government Intervention
Nigeria removed fuel subsidies in 2023. Consequently, authorities can no longer shield consumers from global oil swings.
Without subsidies, crude price increases translate directly to higher pump prices. Therefore, sustained conflict in the Middle East may raise domestic fuel costs.
Experts also question the naira-for-crude arrangement. Reports suggest it covers only about 30 percent of Dangote’s feedstock needs.
Production and Energy Security Challenges
Nigeria currently produces about 1.5 million barrels per day. This figure falls far below its estimated capacity.
Experts recommend boosting output to at least 2.5 million barrels daily. They also urge stronger action against oil theft and pipeline vandalism.
In addition, stakeholders call for prioritising domestic refineries under the Petroleum Industry Act. These measures could strengthen energy security and reduce exposure to foreign shocks.
Can OPEC+ Stabilise the Market?
While OPEC+ plans a supply increase, analysts remain cautious. Even small disruptions in the Gulf could outweigh the extra barrels.
Market observers stress that today’s oil market is more diversified than during the 1973 embargo or the Gulf War. Nevertheless, traders continue to monitor developments closely.
The Road Ahead for Nigeria
Nigeria faces a familiar dilemma. Higher crude prices could boost national revenue. However, rising petrol prices may strain households and businesses.
Therefore, policymakers must balance fiscal gains with consumer protection. As tensions evolve, both government and citizens will watch global oil markets closely.
