Nigeria set for oil windfall as Brent surges above $88 on US-Iran conflict

By Udeme Akpan

Nigeria is poised to benefit from the latest rally in the global oil market after Brent crude, the country’s major pricing benchmark, climbed to $88.10 per barrel, raising prospects for stronger crude oil earnings, improved foreign exchange inflows and better fiscal performance.

The surge came as geopolitical tensions surrounding the United States-Iran conflict continued to unsettle global energy markets, prompting investors to factor in possible supply disruptions from the Middle East, one of the world’s largest oil-producing regions.

Market data showed Brent crude gaining $3.87, or 4.59 per cent, to $88.10 per barrel, while West Texas Intermediate (WTI) rose $3.54, or 4.48 per cent, to $82.49 per barrel.

Also, natural gas prices also strengthened, climbing 1.85 per cent to $2.911, while gasoline futures jumped 3.29 per cent, reflecting expectations of tighter fuel supplies.

For Nigeria, Africa’s largest crude oil producer, the sharp increase in crude prices could provide significant relief to public finances, especially as oil remains the country’s dominant source of export earnings and government revenue.

Higher international oil prices typically translate into increased earnings from crude exports, provided production levels remain stable.

The additional revenue could strengthen the naira through higher foreign exchange inflows, improve government revenues and reduce pressure on budget financing.

The rally also comes at a time when Nigeria is working to increase crude oil production while expanding refining capacity through the Dangote Petroleum Refinery and other domestic refineries.

However, analysts note that Nigeria’s ability to fully benefit from the price rally depends largely on its production performance. The country has struggled in recent years with crude theft, pipeline vandalism, underinvestment and operational challenges that have prevented output from reaching budget targets.
Although the higher oil prices improve revenue prospects, they could also raise the cost of importing refined petroleum products, particularly for marketers still relying on imports.

Rising global gasoline and diesel prices may eventually filter into the domestic market if international prices remain elevated.

The latest market data also showed mixed performance among benchmark baskets.
While the OPEC Basket declined 3.21 per cent to $83.39 per barrel and the Indian Basket slipped 1.54 per cent to $81.42 per barrel, the broader market remained firmly supported by concerns over geopolitical risks and potential supply disruptions.

Energy analysts say continued instability in the Middle East could keep crude prices elevated in the near term, especially if tensions threaten oil exports through critical shipping routes such as the Strait of Hormuz.

For Nigeria, sustained oil prices above $80 per barrel would provide a stronger revenue cushion than earlier market expectations.

Nevertheless, experts stress that maximizing the benefits of the current rally will require higher production volumes, improved security across oil-producing areas and sustained investment in the upstream sector.

With Brent crude approaching the $90-per-barrel mark, Nigeria now has an opportunity to improve fiscal balances, strengthen foreign reserves and accelerate investment in its oil and gas industry—provided it can translate stronger prices into increased export volumes.

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