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The recent surge in global oil prices is providing a much-needed boost to the Central Bank of Nigeria’s efforts to stabilise the naira and rebuild the country’s foreign exchange reserves.

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The naira on Monday appreciated further to close at N1,544.62, marking a slight gain of 0.3 percent compared to N1,549.35, closed on Friday at the Nigerian Foreign Exchange Market (NFEM), according to data published by the CBN.

Although the recent oil price rally has not yet reflected in external reserves accretion, higher crude earnings offer a promising outlook for Nigeria’s fiscal and external positions.

Nigeria’s external reserves declined to $37.93 billion day-on-day, as of June 13, 2025, from $38.02 billion recorded on June 11, 2024, data from the CBN showed.

With crude oil trading higher, the country stands to benefit from increased export revenues, supporting the CBN’s strategy to strengthen external buffers and ease pressure on the local currency.

The Central Bank of Nigeria (CBN) has continued to take steps that ensure higher reserves accretion, stable naira and elevated dollar liquidity. The ongoing oil priceS rally over the Israel-Iran war portends a combination of risks and upsides for the economy, underlining the need for proactive management of its impact.

Brent Oil Futures for July delivery gained over nine per cent, trading at $75.15 per barrel (pb), the highest price since early February. Analysts said the apex bank is already leveraging the oil prices rally to consolidate recent gains on foreign reserves, price and exchange naira stability.

Oil prices spiked higher at the weekend after Israel executed a large preemptive strike on Iran, heightening concerns of a wider conflict in the Middle East and significant disruptions to oil supply routes.

Brent Oil Futures for July delivery gained over nine per cent, trading at $75.15 per barrel, the highest price since early February. West Texas Intermediate (WTI) crude futures increased to $74 per barrel, posting a 10 per cent increase at their peak.

While markets are closely monitoring the potential impact on Iranian oil production, analysts believe escalating concerns over a possible blockade of the Strait of Hormuz could trigger a sharp surge in oil prices.

This development also has a major impact on Nigeria’s economy, dollar earnings, FX reserves position, as well as price and exchange rate stability for the country.

Already, the Nigerian naira outlook has brightened as crude oil passed the Federal Government’s benchmark for the first time. The benchmark for Crude oil under the Federal Government’s Budget was $75 a barrel.

Besides, fundamental reforms introduced by the apex bank have also corrected structural imbalances that prevented maximum growth. The Gross Domestic Product (GDP) grew by 3.4 per cent in 2024, with the fourth quarter hitting 4.6 per cent, the highest quarter of growth in over a decade.

Inflation is easing gradually, steadying the price of food staples like rice and beans while net foreign reserves have increased fivefold, and the Naira exchange rate has stabilised.

Analyst Daan Struyven at Goldman Sachs raised his short-term price target, warning that the conflict could briefly cut 1.75 million bpd of Iranian oil, pushing Brent above $90p/b.

Aside from the expected surge in oil revenue, Olayemi Cardoso, governor of the CBN, has, through foresight, activated other measures that will ensure that more dollars accrue to the economy.

The apex bank is taking measures to improve Nigeria’s export potential, promoting backwards integration principles to reduce the import of items that can be produced locally and simplifying dollar remittances to the domestic economy for Nigerians in diaspora.

Drawing from China’s economic strategy, the apex bank said Nigeria’s competitive exchange rate can drive export-led growth.

To harness this potential, businesses are expected to adopt export-oriented strategies by targeting sectors with strong export potential such as agriculture, manufacturing and creative industries; implement import-substitution models by strengthening domestic production capabilities and reducing reliance on costly imports; and focus on value addition by shifting from exporting raw materials to processed goods, thereby boosting foreign exchange earnings.

Cardoso said Nigeria’s creative sector has the potential to attract $25 billion annually to the economy, highlighting the untapped opportunities in Nigeria’s expanding creative sector, including music, film, crafts, and digital exports.

He urged businesses to explore international markets, digital platforms, and global tours to increase dollar revenue inflows.

Cardoso also recently advised telecom companies to reduce their dependence on foreign imports by producing key components of their inputs locally.

The backwards integration proposal for the telecom industry comes at a time when the real sector is in dire need of sustainable growth. The CBN boss gave insights on what the economy stands to gain from backwards integration in the telecoms sector.

He spoke in Abuja during a visit by Airtel Africa’s management team, led by Group CEO Sunil Taldar. Cardoso stressed that local production would help reduce pressure on the dollar, create jobs, and boost Nigeria’s economy.

He said that the massive production of key inputs that are currently being imported, like SIM cards, cables, and towers, is essential.

He noted that over the past 16 months, the CBN has worked to stabilise the foreign exchange (forex) market, strengthen the Naira, and attract investors. With these improvements, he urged telecom firms to embrace backwards integration.

In response, Sunil Taldar, Airtel Africa’s CEO, praised the CBN’s reforms and expressed support for local production, saying it would benefit telecom companies in the long run. He also reaffirmed Airtel’s commitment to expanding financial inclusion through technology.

Other analysts also mentioned the renewed interest of Foreign Portfolio Investors (FPIs) in the FX market, driven by improved market confidence, a more efficient FX framework, and strengthening macroeconomic conditions alongside the CBN’s sustained market interventions, is expected to continually support naira stability.

Muda Yusuf, chief executive officer, Centre for the Promotion of Private Enterprise (CPPE), said there is a flight by investors towards ‘safe haven assets’ as global uncertainty heightens.