By Udeme Akpan, Energy Editor
Nigeria is poised for a major oil revenue boost but faces renewed pressure on fuel prices, inflation and operating costs as escalating hostilities between the United States and Iran push crude prices above $100 per barrel
Latest market data showed that the Organisation of Petroleum Exporting Countries Basket, including Nigeria’s Bonny Light climbed 876 per cent to $106.30 per barrel, from more than $90 per barrel on Wednesday.
The rally followed a fresh escalation in the US.-Iran conflict, including attacks on Iranian oil tankers, heightening fears of disruptions to crude supplies, shipping routes and critical energy infrastructure in the Middle East.
Revenue boost for government
The immediate benefit for Nigeria is the widening gap between international oil prices and its 2026 budget benchmark of $6485 per barrel.
With major crude benchmarks above $100, Nigeria could earn substantially more from crude exports if the elevated prices persist, boosting government receipts from petroleum-sector royalties, taxes and other oil-related revenues
Stronger export earnings could also increase foreign-exchange inflows and provide additional fiscal space for infrastructure, debt obligations and other government expenditures
However, Nigeria’s ability to maximise the windfall will depend on production currently constrained by underinvestment and other factors
Naira could gain support
In an interview with Vanguard, the National President of the Oil and Gas Services Providers Association of Nigeria, OGSPAN, Mazi Colman Obasi, said: “Higher oil earnings could strengthen Nigeria’s external position by increasing dollar inflows and improving foreign-exchange liquidity
“This could support the naira and ease access to dollars for businesses dependent on imports and foreign transactions
“The impact, however, will depend on actual crude production, export receipts and the amount of foreign exchange reaching the domestic market”
Fuel prices face pressure
According to Obasi, “For consumers and businesses, the oil rally could bring higher energy costs
“Rising crude prices generally increase international refined-product prices, potentially putting pressure on petrol, diesel and aviation fuel if the geopolitical crisis persists
“Nigeria’s expanding domestic refining capacity offers some protection, particularly with the Dangote Petroleum Refinery increasingly supplying the local market
“Domestic refiners, however, remain exposed to higher crude feedstock costs, while their profitability will depend on movements in refined-product prices”
Obasi said: “It was gathered that higher energy costs could complicate Nigeria’s battle against inflation
“Petrol directly affects transportation, while diesel is widely used by manufacturers, logistics operators, telecommunications companies and businesses relying on private power generation
“Any sustained increase in energy costs could therefore raise the cost of producing and distributing food, manufactured goods and services”
Domestic refining opportunity
It was gathered that the crisis underscores the strategic importance of Nigeria’s investment in domestic refining
Higher international product prices could improve the commercial prospects of local refineries while reducing the country’s exposure to expensive imports and external supply disruptions
For the Dangote refinery and other emerging projects, the opportunity comes with a challenge: higher crude costs could squeeze margins if refined-product prices do not rise proportionately
Nigeria must maximise the windfall
Oil above $100 presents Nigeria with a significant fiscal opportunity, but weak production could limit the gains
An industry leader that pleaded to be anonymous, said: “The priority should be to raise crude output, maximise export earnings and strengthen fiscal buffers, while using expanding domestic refining capacity to reduce exposure to external energy shocks
“The latest price surge therefore offers Nigeria the prospect of stronger revenues, but also tests its ability to manage the inflationary consequences of higher oil and energy costs”