As the United States and Israel escalate military action against Iran, analysts warn that the consequences could extend far beyond the Middle East — with implications for global oil markets, inflation and cost of living in countries such as Nigeria.
Israel and the US launched missile strikes on Iran on Saturday. The strikes came two days after Iran and the US held indirect discussions over Tehran’s nuclear programme — echoing a similar episode last June when Israel struck Iran midway into negotiations between Iran and the US.
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The renewed escalation is already reverberating across global energy markets. Brent crude rose by 3.66 per cent to trade at about $73 per barrel.
With concerns mounting over the strategic Strait of Hormuz — a vital artery for global oil shipments — the ripple effects may soon be felt across many oil-dependent economies worldwide, including Nigeria.
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The Nigerian government has called on the warring parties to end hostilities and resume dialogue.
Strait of Hormuz under pressure
Amid the attacks, some major oil and trading companies have reportedly suspended shipments through the Strait of Hormuz.
“Our ships will stay put for several days,” a top executive at a major trading company told Reuters.
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About 20 million barrels of crude oil and other fuel types pass daily through the narrow waterway between Iran and the Arabian Peninsula.
The Strait is vital for exports from Saudi Arabia, Iraq, Kuwait, Qatar and Iran. Any disruption — or even the threat of one — typically triggers sharp spikes in oil prices and shipping insurance costs.
Although Saudi Arabia and the United Arab Emirates operate alternative pipelines that bypass the strait, analysts note that these routes cannot fully accommodate the total volume of crude that usually transits the corridor.
History shows how sensitive oil markets are to conflicts in the Middle East. During the Gulf War (1990–1991), Brent crude prices doubled from about $15 per barrel in July 1990 to over $40 by October after Iraq invaded Kuwait.
By contrast, during the 2003 Iraq War, prices experienced a smaller pre-war spike before stabilising once supply fears eased.
Since January, when signals of a possible US-Iran confrontation intensified, oil markets have experienced noticeable volatility.
Nigerian Macroeconomic Impact
With Brent crude trading above Nigeria’s 2026 budget benchmark of $64.85 per barrel, higher prices could boost export earnings, strengthen foreign reserves and increase inflows into the Federation Account — potentially raising FAAC allocations to federal, state and local governments.
However, the benefits may be offset by structural realities.
Despite being Africa’s largest oil producer, Nigeria still imports a portion of its refined petroleum products. These imported refined products, such as petrol and aviation fuel, are susceptible to price volatility, and prices are expected to rise as international crude oil prices rise.
The major functional refinery in Nigeria also imports a lot of its crude.
As of mid-2025, the Dangote Refinery reportedly imported between 9 and 10 million barrels of crude oil per month to sustain operations amid supply constraints. An increase in crude oil prices is expected to raise the prices of petrol and other refined products produced by the refinery.
If global crude prices continue to rise, the cost of refined products — including petrol and diesel — could increase domestically, worsening inflation and deepening the cost-of-living crisis.
Higher shipping and insurance costs would further raise the price of imported goods, with ripple effects on transportation, food distribution and household expenses.
Air travel and mobility disruptions
Beyond oil, the conflict is already disrupting global travel.
PREMIUM TIMES reported that several international airlines have cancelled, suspended or rerouted flights to and over the Middle East due to safety concerns.
US President Donald Trump announced that the US had begun “major combat operations” in Iran after Israel launched missile strikes. Iran has since retaliated, targeting Israeli and US-linked assets across parts of the Middle East.
Airspaces in several countries have been temporarily closed, leaving passengers stranded and forcing airlines to take longer, costlier routes.
For Nigerians, the impact could include higher fares, travel delays and uncertainty. Those planning religious pilgrimages, including the lesser Hajj during Ramadan, may face disruptions.
Students and professionals in affected countries could also experience mobility challenges.
Potential Security Risk
Analysts also warn of potential domestic security concerns.
The Islamic Movement in Nigeria (IMN), a pro-Iran-aligned Shia group led by Ibrahim El-Zakzaky, has historically organised protests in solidarity with Iran, particularly in Abuja and Kaduna.
The group often chants ‘Death to America, Death to Israel’ during its rallies, even when there was no war between the parties.
Given the group’s ideological alignment, the US-Israeli strikes could become an emotional and political flashpoint. 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 if large-scale protests are forcibly dispersed, tensions could escalate and disrupt public order in affected cities.
Experts Speak
Ridwan Olayemi, CEO of Vestance, said Nigeria could experience a significant shift in economic conditions if tensions escalate further.
“Iran’s strategic location and the central role of the Strait of Hormuz in global oil and shipping logistics mean that any disruption creates risks for a substantial share of global oil supply and typically pushes crude prices upward,” he said.
“For Nigeria, the impact could be mixed. Higher crude oil prices may increase oil-related receipts and improve inflows into the Federation Account, depending on production levels and remittance performance.”
He added that stronger oil earnings could improve Nigeria’s foreign exchange position and ease pressure on the naira — provided production remains stable, and inflows are effectively captured.
However, he warned of significant downside risks.
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“Rising global oil prices can translate into higher domestic fuel, energy and transport costs. Increased shipping and insurance costs could raise the cost of imported goods and local movement of goods within Nigeria, broadening inflationary pressures,” he said.
The Community Action for Food Security also expressed concern over the indirect effects of the conflict.
“While Nigeria is not directly involved in the current strikes, the indirect effects on energy prices, inflation, food security and economic resilience are areas of concern. We call for sustained peace, renewed dialogue and international cooperation to safeguard development progress,” the organisation said.
An economist working at the intersection of oil and gas and humanitarian assistance in Dakar warned that prolonged hostilities could undermine fragile economic stability across Africa.
“Crude oil prices will rise if hostilities continue. While this may seem positive for producers like Nigeria, overall it could destabilise economies such as Ghana,” the economist, who declined to have his name in print, said.
He noted that many African countries depend heavily on imported refined products, and disruptions to trade routes and higher shipping costs would likely translate into higher pump prices and renewed inflationary pressures.
He also warned that escalating tensions would add to an already volatile global security environment, potentially diverting resources from development to defence spending and shrinking foreign investment flows into Africa.
Similarly, he argued, competition for critical minerals — essential for defence systems and advanced technologies — could intensify, reshaping investment and security dynamics across the continent.
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