ANALYST HIGHLIGHTS IMPACT OF IRAN–U.S.–ISRAEL TENSIONS ON NIGERIA’S ECONOMY
Read Time:1 Minute, 59 Second
By: Fasasi Hammad
Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), has highlighted the potential effects of the Iran–United States–Israel conflict on Nigeria’s economy.
In a statement issued on Sunday in Lagos, Yusuf explained that the impact could be both beneficial and adverse, depending on how long the conflict lasts and the effectiveness of domestic policy measures.
He pointed out that the escalating tensions between Iran, the U.S., and Israel have introduced heightened geopolitical risks to the global economy.
“Energy markets are the primary channel through which these risks transmit, given the strategic significance of the Strait of Hormuz, which handles roughly 20 per cent of the world’s daily crude oil supply,” he said.
Yusuf stressed that any disruption in this corridor would immediately affect global oil prices, shipping costs, insurance premiums, and supply chains.
“There is also the issue of output disruption, as Middle Eastern countries are major oil producers,” he added.
For Nigeria, an oil-dependent economy where crude contributes over 85 per cent of export earnings and roughly half of government revenue, the implications are considerable, Yusuf noted.
He observed that geopolitical tensions in the Middle East have historically driven sharp increases in crude oil prices due to fears of supply interruptions, with speculative risks around the Strait of Hormuz often causing price swings of $5–$15 per barrel within short periods.
“For Nigeria, each rise in crude oil prices translates into higher export earnings and fiscal revenue,” Yusuf said.
He added that the immediate benefits could include increased crude export receipts, improved foreign exchange inflows, strengthened external reserves, and higher FAAC allocations across all government tiers.
“However, these revenue gains depend heavily on production levels,” he cautioned. “Nigeria’s current crude output ranges between 1.4 million and 1.6 million barrels per day—below installed capacity and vulnerable to oil theft, pipeline vandalism, and underinvestment in upstream infrastructure. Without sustained improvements in production efficiency and security, Nigeria may not fully capitalize on higher oil prices.”
Yusuf also highlighted medium-term risks: if the conflict intensifies and dampens global growth, oil demand could fall, triggering price corrections.
He added that while higher oil prices could ease short-term pressure on the naira and boost investor confidence, these effects are contingent on sustained production and effective domestic policy responses.
Happy
0 %
Sad
0 %
Excited
0 %
Sleepy
0 %
Angry
0 %
Surprise
0 %
0
0