NIGERIA could see higher oil revenues amid escalating hostilities between the United States, Israel, and Iran, but energy experts warn that ordinary Nigerians may also face fresh increases in petrol and diesel prices if global crude prices surge above $90 per barrel.
As tensions in the Middle East roil global markets, analysts told News Point Nigeria that Africa’s largest crude producer remains exposed to international price shocks despite recent reforms and expanded domestic refining capacity.
The crisis intensified following coordinated military strikes on Iran by the United States and Israel, triggering retaliatory exchanges and heightening fears of a broader regional war.
Brent crude jumped nearly 10 per cent over the weekend, trading around $80 per barrel in over-the-counter markets on Sunday. As of 10 pm, Brent stood at $72.87 per barrel, while West Texas Intermediate traded at $67.02. Nigeria’s Bonny Light crude was priced at $78.62 per barrel.
Sources warned that prices could climb toward or even beyond $90 per barrel if tensions escalate further, particularly around the strategic Strait of Hormuz, a narrow corridor that handles more than 20 per cent of global oil shipments.
Any disruption to the route, which links the Persian Gulf to the Indian Ocean, could trigger supply shocks and sharp price spikes.
Higher crude prices typically translate into increased foreign exchange earnings and improved government revenue for Nigeria. With oil accounting for a significant share of export earnings and fiscal inflows, a sustained price rally could ease pressure on public finances.
However, experts caution that the benefits may be offset by rising domestic fuel costs.
Recent checks across major cities show petrol selling between N824 and N880 per litre, depending on location and logistics costs, following adjustments by the Dangote Petroleum Refinery, which recently reduced its gantry price from N799 to N774 per litre.
Kelvin Emmanuel, Chief Executive Officer of Dairy Hills, warned that Nigeria’s fuel pricing structure remains vulnerable because the Dangote Refinery still imports a substantial portion of its crude feedstock.
According to him, the refinery processes about 18 million barrels monthly, with roughly 12 million barrels imported and only about 5.7 million sourced locally from the Nigerian National Petroleum Company Limited.
“Any sharp increase in crude oil prices from this escalation will lead to a revision in the cracking margin spread of the refiner and, consequently, the price of refined products,” Emmanuel said.
He added that rising war-risk insurance premiums on tanker vessels would further increase landing costs for imported crude, potentially forcing refiners to revise pump prices if crude exceeds $90 per barrel.
Olatide Jeremiah, Chief Executive Officer of Petroleumprice.ng, noted that although Nigeria is Africa’s largest crude producer and home to the continent’s biggest refinery, reliance on imported crude and refined products leaves the country exposed.
“If Dangote sourced 100 per cent of its crude locally, global price volatility would have little impact on domestic prices,” he said. “However, more than 60 per cent of its feedstock is sourced abroad, and about 40 per cent of refined products consumed locally are still imported.”
Jeremiah projected that while federal revenue may rise, Nigerians should brace for potential pump price increases if tensions persist.
Energy law expert Dayo Ayoade of the University of Lagos explained that following the removal of fuel subsidies, Nigeria can no longer shield consumers from global oil market volatility.
“Without subsidies, any crude price increase will directly impact pump prices,” he said, adding that the instability in the Middle East introduces both perception-driven and real supply risks.
Nigeria currently produces about 1.5 million barrels per day roughly half its potential capacity. Experts argue that boosting production to at least 2.5 million barrels per day, tackling oil theft, and prioritising domestic refineries under the Petroleum Industry Act are critical steps toward energy security.
They also questioned the transparency and sufficiency of the naira-for-crude arrangement, which reportedly supplies only about 30 per cent of Dangote’s feedstock needs.
Professor Emeritus Wumi Iledare urged caution against panic, noting that today’s oil market is more diversified than during historic shocks such as the 1973 embargo or the Gulf War.
Meanwhile, key members of the OPEC+ alliance, including Saudi Arabia, Russia, Kuwait, Oman, Iraq, and the UAE announced a production adjustment of 206,000 barrels per day effective April. However, analysts warned that the increase may be insufficient if shipping disruptions intensify.
Jorge Leon of Rystad Energy observed that if oil flows through the Strait of Hormuz are significantly hindered, modest output increases elsewhere may not stabilise prices.
As global markets watch developments in the Gulf, Nigerian consumers and policymakers alike face a familiar dilemma balancing oil windfalls with the risk of domestic fuel pain.