By Ephraim Agbo
Let’s talk oil, war, and wallets—because what’s brewing in the Middle East might just hit your pocket in Nigeria, and not in the way you expect.
🛢️ Why Oil Prices Are on the Edge
The tension between Iran and Israel has moved from threats to strikes. With drone attacks, missile launches, and proxy escalations flying across borders, the world’s biggest oil chokepoint—the Strait of Hormuz—is now a war risk. Nearly 20% of global oil flows through that narrow passage, and Iran has hinted more than once about mining or blocking it.
Markets are already jittery. Brent crude recently ticked past $91 per barrel, and analysts say a full-scale disruption could push prices well over $120–130. Historically, whenever this waterway gets threatened, prices leap.
But here’s the real question for Nigerians: if oil prices go up, will your fuel price go down, stay the same—or go haywire?
🇳🇬 Nigeria: Oil Rich, Yet Fuel Poor?
You’d think a country like Nigeria—Africa’s biggest oil producer—should rejoice when oil prices jump. In theory, that means more revenue, stronger forex reserves, and more money for development.
But here's the twist: Nigeria doesn’t just produce oil. It imports nearly all its refined petrol, diesel, and kerosene—or at least it used to.
Enter the Dangote Refinery—Nigeria’s billion-dollar hope. It began local refining in early 2024 and now supplies a good chunk of the country’s domestic fuel.
So will Nigeria be shielded if global oil prices skyrocket? The answer: partially yes, but mostly no. Here’s why.
💸 Is Nigeria Selling Oil Cheap to Dangote?
Not quite. In 2024, the government introduced a naira-for-crude scheme—letting Dangote and other local refiners buy crude in naira, instead of scarce dollars. It was meant to help lower fuel prices at home.
But it’s not a free pass.
Prices are still pegged to Brent crude. So if the world pays $130 per barrel, Dangote still pays that benchmark—just in naira, using an agreed rate. There’s a slight cushion, but not enough to isolate Nigeria.
In fact, by early 2025, Dangote even halted naira sales temporarily due to mismatch issues: he was paying for crude in naira but earning revenues in dollar-linked costs. Translation? Even domestic refining feels the global pinch.
🏦 Government’s Dilemma: Subsidize or Watch Prices Soar?
Here’s the balancing act:
- If oil prices skyrocket, government revenue increases.
- But domestic fuel prices may also rise—unless the government steps in with subsidies or pricing interventions.
Problem is, Nigeria has been trying to move away from subsidies due to the massive cost (₦11 trillion spent in a year at one point!). If fuel prices shoot up again, the government must either:
- Bring back partial subsidies (and risk draining the treasury), or
- Let market forces rule (and risk public backlash and protests).
⛽ So What Happens at the Pump?
If the Iran–Israel war intensifies and oil crosses $120–$130 per barrel:
- Fuel at Nigerian filling stations could go above ₦1,000/litre, unless capped.
- Diesel and aviation fuel—which are mostly deregulated—would rise even faster.
- Black markets could resurge, and transport costs would spike.
- Inflation—already biting—could deepen.
🌍 Global vs Local: The Nigerian Catch-22
Nigeria is caught between two worlds:
- As a crude seller, it wants high prices.
- As a fuel buyer, it fears those same prices.
Unless the domestic refining system becomes fully self-sufficient, and crude pricing is restructured for local refineries, Nigeria will continue to suffer this global-local contradiction.
✅ Final Thoughts
The Iran–Israel war could redraw the map of energy pricing. And while Nigeria might earn more on paper, the real cost will be felt at the pump, in food prices, and in transport fares.
The days ahead could test how far the government is willing to go to protect its citizens—with or without subsidies—and how much the market can bear.
So yes, the Strait of Hormuz may seem far away, but its tremors will surely ripple through Lagos, Kano, and Port Harcourt.
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