Market News

By : Abigail Ikhaghu

Rising global oil prices, driven by escalating tensions in the Middle East and supply disruptions linked to the closure of the Strait of Hormuz, are expected to bolster Nigeria’s economic outlook, although heightened geopolitical risks may limit gains.

This was contained in a market analysis released yesterday by the Head of Market Research at FXTM, Lukman Otunuga.

Otunuga noted that oil benchmarks are on track for their strongest monthly performance since 1990, with prices climbing into triple digits as fears over supply shocks intensify.

He explained that the continued closure of the Strait of Hormuz has played a major role in pushing prices higher, keeping oil fundamentally bullish with the $100 level remaining a key psychological threshold for Brent.

For Nigeria, Otunuga described the development as a positive shift, given the country’s status as a net oil exporter.

He said, “This is good news for Nigeria, which is a net oil exporter. Higher oil prices should translate to currency gains, though global risk-off from the Iran conflict may offset some upside.”

Otunuga highlighted that the global market opened the week on a tense note following accusations by Iran that the United States was preparing for a possible ground assault, even as President Donald Trump signalled willingness to pursue talks to end the conflict.

The development marked what the investment described as another dangerous phase in the war, now in its fifth week.

Market sentiment improved slightly after a report by the Wall Street Journal indicated that Trump had told aides he was open to ending the war.

Despite this, Otunuga warned that inconsistent messaging from the United States alongside continued shutdown of the Strait of Hormuz could sustain volatility as investors react to ongoing uncertainty.

He also pointed out that gold has declined sharply, shedding nearly 14 per cent over the month despite prevailing risk-off.

According to him, the drop in the precious metal’s value has been driven by a stronger dollar and reduced expectations of lower US interest rates, even as recent comments by Federal Reserve officials eased concerns about further rate hikes.

“Despite recent comments by Fed officials that eased rate hike bets, the precious metal has been punished by a broadly stronger dollar and diminishing bets around lower U.S. rates,” Otunuga said.

Beyond geopolitical developments, attention is expected to shift to the U.S. March non-farm payrolls report due on Friday, which Otunuga described as a key indicator of the health of the labour market.

He noted that the outcome could influence expectations around the Federal Reserve’s next move, especially at a time when rising energy prices are complicating the economic outlook.

He also drew attention to movements in the currency market, noting that the USD/JPY pair crossed above the 160-level last Friday for the first time since July 2024. He recalled that this level was previously defended by the Japanese government in 2024, suggesting that a similar intervention could trigger a sharp selloff if repeated.

Otunuga added that the ongoing Iran conflict may further drive demand for safe-haven assets such as the Japanese yen, while fluctuations in oil prices could also impact the currency given Japan’s heavy reliance on crude imports from the Middle East.