By Joyce Ekeh
Nigeria could reap billions of naira in additional oil revenue as crude prices surged above $100 per barrel, but the rally may also trigger fresh pressure on petrol, diesel, aviation fuel, transportation costs and inflation.
The Organization of Petroleum Exporting Countries (OPEC) Basket, which includes Nigeria’s Bonny Light, rose 8.76 per cent to $106.30 per barrel, from above $90 on Wednesday, according to latest market data.
The sharp increase followed renewed escalation in hostilities between the United States and Iran, including attacks on Iranian oil tankers, heightening fears of supply disruptions, threats to shipping routes and possible damage to critical energy infrastructure in the Middle East.
For Nigeria, the surge puts the country’s crude earnings significantly above the $64.85 per barrel benchmark contained in the 2026 budget.
The higher price could translate into increased government receipts from crude exports, petroleum royalties, taxes and other oil-related revenues, while stronger dollar inflows could provide support for the naira and improve foreign exchange liquidity.
However, industry stakeholders warned that the size of the windfall would ultimately depend on Nigeria’s ability to increase crude production and ensure that higher export earnings translate into actual fiscal and foreign-exchange gains.
The National President of the Oil and Gas Services Providers Association of Nigeria, OGSPAN, Mazi Colman Obasi, told Vanguard that the price surge could strengthen Nigeria’s external position.
“Higher oil earnings could strengthen Nigeria’s external position by increasing dollar inflows and improving foreign-exchange liquidity,” Obasi said.
He added that stronger inflows could support the naira and improve access to foreign exchange for businesses, but cautioned that the benefits would depend on actual crude production and export receipts.
On the downside, Obasi said the same oil rally could increase energy costs for Nigerians and businesses if the geopolitical crisis persists.
“Rising crude prices generally increase international refined-product prices, potentially putting pressure on petrol, diesel and aviation fuel,” he said.
He noted that Nigeria’s growing domestic refining capacity, particularly the Dangote Petroleum Refinery, could cushion the impact of external supply shocks and reduce dependence on imported refined products.
“Domestic refining offers some protection, particularly with the Dangote Petroleum Refinery increasingly supplying the local market,” Obasi said.
“But domestic refiners remain exposed to higher crude feedstock costs, while their profitability will depend on movements in refined-product prices.”
Inflation threat
The oil rally could also complicate efforts to bring down inflation, with higher energy costs feeding into transportation, manufacturing, logistics and food distribution.
Obasi said petrol costs directly affect transportation, while diesel remains critical to manufacturers, logistics companies, telecommunications operators and businesses dependent on private power generation.
“Any sustained increase in energy costs could therefore raise the cost of producing and distributing food, manufactured goods and services,” he warned.
The situation could place Nigeria in a delicate position: higher crude prices would improve government revenue, but rising domestic energy costs could erode some of the economic benefits through renewed inflationary pressure.
Production remains key
Analysts also pointed to Nigeria’s crude production challenges as a major factor that could determine whether the country fully benefits from the price rally.
Despite the jump in international prices, lower-than-potential production means Nigeria may not capture the full benefit of every additional dollar earned per barrel.
An industry source, who spoke on condition of anonymity, said the priority should be to turn the price surge into a broader economic advantage.
“The priority should be to raise crude output, maximize export earnings and strengthen fiscal buffers, while using expanding domestic refining capacity to reduce exposure to external energy shocks,” the source said.
According to the source, the latest surge presents Nigeria with both an opportunity and a test.
“The latest price surge offers Nigeria the prospect of stronger revenues, but also tests its ability to manage the inflationary consequences of higher oil and energy costs,” the source said.
With crude now trading far above the 2026 budget benchmark, the immediate challenge for the Federal Government is to maximize the revenue opportunity without allowing higher energy costs to worsen the cost-of-living pressures confronting households and businesses.
