Market News

By : David Meshioye

The ongoing tensions between Iran, Israel and the United States has continue to send tongues wagging with fears of imminent wars. The fallout could stretch far beyond the Middle East, with far-reaching implications for global oil markets, inflation and the cost of living in oil-dependent economies such as Nigeria, writes David Meshioye

Tensions in the Middle East are rapidly escalating after United States President Donald Trump approved military action against Iran in the early hours of February 28, 2028, accusing Tehran of threatening US interests. Iranian state television later confirmed the killing of the country’s long-ruling supreme leader, a development widely regarded as a historic and destabilising moment for the Islamic Republic.

Expectedly, the global economy is poised for significant turbulence, with soaring inflation, rising oil prices, heightened financial market volatility, and a potential contraction in global output. Nigeria is especially exposed to these shocks. Inflation is projected to reach 30–35%, while the naira faces further depreciation. These pressures could exacerbate social tensions, particularly in northern regions, where rising living costs and economic hardship may trigger protests, unrest, or other forms of public discontent.

Although the Nigerian government has called on all parties to end hostilities and return to dialogue, the renewed conflict is already reverberating across global energy markets. Brent crude rose by 3.66 per cent to trade at about $73 per barrel. Growing anxiety over the Strait of Hormuz—a vital artery for global oil shipments—means the ripple effects could soon be felt across many economies worldwide, particularly those dependent on oil exports and imports, including Nigeria.

Overall, the conflict has the potential to affect Nigeria’s crude oil sales, government revenue, imports of strategic goods and services, capital inflows, exchange-rate stability, air travel and internal security.

The Positives

Nigeria is ranked among the world’s leading crude oil producers, trailing countries such as Saudi Arabia, Iraq, the UAE, Iran and Kuwait. Any disruption to production in these Gulf states could create a window of opportunity for Nigeria—if it can raise output.

Figures from OPEC show that Nigeria produced about 1.47 million barrels per day in January 2026, with Spain, India and France among its top export destinations. If Nigeria succeeds in increasing production at a time when supply from the Gulf is constrained, higher prices could translate into stronger fiscal revenues, improved foreign-exchange inflows and temporary relief for government finances.

Structural constraints

Despite being Africa’s largest crude oil producer, Nigeria still imports a significant share of its refined petroleum products. These imports—such as petrol and aviation fuel—are highly exposed to price volatility and are expected to become more expensive as global crude prices rise. Even the country’s largest operational refinery, Dangote Refinery, depends heavily on imported crude.

As of mid-2025, the refinery reportedly imported between nine and 10 million barrels of crude oil monthly to sustain operations amid domestic supply constraints. As a result, higher global crude prices are likely to translate into increased domestic prices for petrol, diesel and other refined products, worsening inflation and deepening Nigeria’s cost-of-living challenges. There are also reports that Iran could consider closing the Strait of Hormuz, which handles nearly 20 per cent of global oil supply. Any blockage would severely disrupt supply chains and amplify economic risks worldwide.

Security concerns at home

Beyond economics, there are concerns about possible domestic security implications. In the past, protests have erupted in Kano, Kaduna and Abuja following US military actions against Iran. Security analysts warn that activities in parts of northern Nigeria could again be disrupted by the Islamic Movement in Nigeria (IMN), a pro-Iran Shia group led by Ibrahim El-Zakzaky.

The Muslim sect had, in the past, occupied a major highway in Zaria during protests and allegedly attacked the soldiers when things turned ugly.

In the past, many persons had reportedly lost their lives in the clash between the soldiers attached to Buratai’s convoy and the Shiite Muslim sect.

The group is known for chanting “Death to America” and “Death to Israel” during rallies when tensions escalate between Iran, the US and Israel. Given its ideological alignment, the latest hostilities could become a potent flashpoint for both emotion and politics.

Previous IMN demonstrations in Abuja and Kaduna have, at times, resulted in clashes with security forces, leading to casualties, arrests and property damage. Security experts caution that any forceful dispersal of large protests could escalate tensions and disrupt public order in affected cities.

Exchange-rate implications

Nigeria relies heavily on oil earnings to build external reserves. With reserves reportedly above $50 billion, many analysts expect the naira to remain relatively stable in the near to medium term. Paradoxically, a worsening of the crisis could even strengthen the naira—if Nigeria manages to boost output and benefit from higher oil prices while global demand for its crude remains strong.

However, downside risks persist. Heightened geopolitical tensions could dampen foreign investor appetite for Nigerian assets. If global investors turn more risk-averse, capital flows into emerging markets, including Nigeria, could slow.

Disruption to air travel

Beyond energy markets, the conflict is already disrupting global travel.

Nigerians travelling to and from Qatar, Israel, Iran, Iraq, Syria, Kuwait and the United Arab Emirates have been stranded as airspaces close across large parts of the Middle East.

Several international airlines—including Air France, Air India, Turkish Airlines, Norwegian, Air Algérie, Qatar Airways, Emirates and Lufthansa—have cancelled or suspended flights on multiple routes. Flights were grounded after airstrikes on Iran were followed by retaliatory attacks on US military facilities in parts of Qatar, Kuwait, Bahrain, Jordan and Saudi Arabia.

Passengers scheduled to depart Nigeria on Qatar Airways flights were stopped, with some already seated onboard before being asked to disembark. Students and professionals in affected countries are also facing mobility challenges.