Nigeria may be heading for another wave of inflationary pressure as the price of crude oil rises above $100 per barrel amid escalating tensions between the United States and Iran, sparking concerns over possible increases in petrol prices, transport fares and the overall cost of living.
The development, however, could provide the Federal Government with significant additional oil revenue beyond what was projected in the 2026 national budget.
Nigeria’s Bonny Light crude has risen above the $100 per barrel mark for the first time since May, as growing concerns over the escalating Middle East crisis raise fears of disruptions to global oil supplies.
The Middle East accounts for nearly one-third of global crude oil exports, and any prolonged disruption to production or shipments from the region could keep international oil prices elevated.
For Nigeria, the rise in crude prices presents both an opportunity and a challenge. While higher oil prices could increase government revenue and improve the country’s foreign exchange earnings, economists warn that the benefits could be undermined by rising domestic fuel costs and increased inflation.
Under the 2026 Federal Government budget, crude oil was benchmarked at $64.85 per barrel, with projected daily production of 1.84 million barrels and an exchange rate assumption of N1,400 to the US dollar.
With international crude prices now trading above $100 per barrel, Nigeria could be earning roughly $35 more per barrel than the budget benchmark. If production and export levels remain stable, the price increase could translate into billions of naira in additional government revenue.
However, the potential revenue windfall could be limited by lower-than-projected crude oil production.
Data from the Nigerian Upstream Petroleum Regulatory Commission indicates that Nigeria’s current oil production is around 1.7 million barrels per day, including condensates, below the 1.84 million barrels per day assumption contained in the 2026 budget.
Beyond government revenue, the immediate concern for consumers is the possible impact of higher international crude prices on the domestic downstream petroleum market.
With the downstream sector operating under deregulation, an increase in global crude prices could raise the cost of imported petroleum products and increase the landing cost of petrol. This could put pressure on marketers to adjust pump prices upward.
Any significant increase in petrol prices is likely to have wider economic consequences, particularly through higher transportation costs.
An increase in transport fares could trigger a chain reaction across the economy, leading to higher prices for food, manufactured products and other essential goods and services as businesses pass increased logistics and operating costs to consumers.
The development has also heightened concerns about volatility in the downstream petroleum sector.
Managing Director of Petroleumprice.ng, Jeremiah Olatide, said the recent increase in crude oil prices had disrupted expectations of further reductions in petrol prices following a decline in domestic loading costs.
“With the resumption of loading by Dangote Petroleum Refinery in naira at N1,215 per litre on Wednesday, we expected fuel importers to reduce prices, and some actually did. However, the sudden spike in crude oil prices due to the Middle East crisis has disrupted that trend. We should expect more price instability in the coming weeks,” Olatide said.
Similarly, the National President of the Oil and Gas Services Providers Association of Nigeria, Mazi Colman Obasi, said the full impact of the rising crude oil prices could soon spread across the economy, even though widespread price increases had yet to be recorded at depots and filling stations.
Obasi warned that the consequences could become more pronounced as operators across the petroleum value chain respond to changes in global crude prices.
“The implications will be far-reaching for households, businesses and the wider economy once operators across the value chain adjust their prices,” he said.
Meanwhile, market data indicate that several petroleum depots in Lagos, Warri and Calabar had reduced their loading prices before the latest surge in crude oil prices, in an effort to attract customers. Prices in Port Harcourt, however, remained largely unchanged.
Petrol prices at filling stations across Lagos and neighbouring areas currently range between N1,300 and N1,400 per litre, depending on location.
As the international oil market remains sensitive to developments in the Middle East, Nigerians are likely to watch closely for any changes in domestic petrol prices and their potential impact on transportation, food prices and household expenses.
While the Federal Government could benefit from higher crude oil earnings, the extent of the economic gains will ultimately depend on Nigeria’s ability to sustain oil production, maximise export revenue and manage the inflationary consequences of higher energy costs.
