Middle East Crisis Could Earn Nigeria Up To ₦30 Trillion – NESG

Nigeria May Gain Revenue Windfall from Global Tensions

NIGERIA could earn as much as ₦30 trillion in additional revenue if the ongoing geopolitical tensions between the United States, Israel and Iran persist, according to a new policy brief released by the Nigerian Economic Summit Group (NESG).

The economic think tank noted that while the conflict presents risks for the global economy, it also offers a potential fiscal opportunity for oil-exporting countries such as Nigeria.

According to the NESG, Nigeria could record about ₦2.3 trillion in additional oil revenue in the event of a short-term shock, while a prolonged crisis could generate as much as ₦30 trillion.

However, the group stressed that the scale of the benefit will depend largely on how Nigerian policymakers respond to the unfolding crisis.

Global Energy Shock with Mixed Consequences

The NESG described the escalating confrontation involving the United States, Israel and Iran as the most significant energy market disruption since the Russia–Ukraine War.

The crisis has pushed global oil prices upward as markets react to fears of supply disruptions, particularly around the strategic Strait of Hormuz, one of the world’s most critical shipping routes for crude oil.

For Nigeria, the implications are both positive and negative.

Higher oil prices could strengthen government revenues and boost foreign exchange inflows. At the same time, rising global energy costs could trigger domestic inflation through increased fuel prices and higher transportation costs.

Nigeria’s Strategic Position as Atlantic Exporter

According to the NESG, Nigeria’s geographic location offers some protection from the supply disruptions affecting Middle Eastern oil exporters.

Unlike Gulf producers whose exports pass through the Strait of Hormuz, Nigeria exports crude primarily through the Atlantic, reducing exposure to potential blockades or shipping disruptions.

“This means Nigeria can benefit from higher oil prices without facing the direct supply disruptions experienced by Gulf producers,” the policy brief stated.

Nevertheless, the group warned that the upside may not automatically translate into economic gains.

Structural Challenges Could Limit Gains

The NESG cautioned that several domestic factors could prevent Nigeria from fully capitalising on the oil price surge.

Key constraints include limited crude production capacity, structural weaknesses in the petroleum sector, inflationary pressures, and fiscal spending associated with election cycles.

If policymakers fail to manage the situation carefully, the country could once again experience the familiar boom-and-bust cycle associated with oil windfalls.

“If carefully managed, the crisis could consolidate Nigeria’s recent reform progress,” the group said.

“Conversely, a weak policy response risks repeating the country’s historical boom-bust pattern, where oil windfalls translate into rapid spending expansions that erode fiscal discipline.”

Call for Fiscal Discipline and Stronger Buffers

To maximise the potential benefits, the NESG recommended that Nigeria adopt disciplined macroeconomic policies.

These include saving part of the oil revenue windfall, strengthening foreign exchange reserves, maintaining monetary policy discipline, and expanding targeted social support for vulnerable households rather than relying on broad price controls.

The group argued that prudent management of the windfall could strengthen Nigeria’s macroeconomic stability and support long-term growth.

Importance of Domestic Refining Capacity

In a related analysis, Muda Yusuf of the Centre for the Promotion of Private Enterprise emphasised the need for Nigeria to expand its domestic refining capacity.

Despite being a major crude oil producer, Nigeria has historically depended heavily on imported petroleum products.

This dependence has exposed the country to global supply disruptions and has often led to fuel shortages and long queues at filling stations during periods of international market instability.

Yusuf said strengthening local refining capacity would provide a critical buffer against external supply shocks.

Government Monitoring Economic Risks

Meanwhile, the federal government says it is closely monitoring developments in the Middle East conflict and assessing their potential impact on Nigeria’s economy.

Wale Edun, who chairs the country’s Economic Management Team, said policymakers are coordinating fiscal, monetary, and energy policies to manage emerging risks.

According to him, the government remains committed to protecting households and businesses from external shocks while preserving the gains of ongoing macroeconomic reforms.

Edun assured that authorities will continue to review policy options to ensure that global developments do not undermine Nigeria’s economic stability.