The escalating conflict between Israel and Iran has significant implications not just for the Middle East, but for oil-dependent economies around the world Nigeria included. Iran, a key OPEC member, produces over 3 million barrels of oil per day, much of which is exported to China. Should Israel’s military strikes disrupt Iranian oil supply, it could force China and other buyers to source oil elsewhere, tightening global supply and driving up prices.
Although OPEC+ has about 3.5 million barrels of spare capacity mainly from Saudi Arabia and the UAE analysts warn that a prolonged disruption could remove up to 1.75 million barrels a day from global circulation. This kind of supply shock could reshape trade flows and push oil prices higher, with ripple effects across energy markets.
For Nigeria, a major oil exporter, this scenario presents both opportunities and risks. On one hand, higher global oil prices could boost Nigeria’s revenue and improve its trade balance on paper. But history warns us to be cautious: in 2022, oil peaked at $130 per barrel during the Russia-Ukraine war, yet Nigeria saw limited benefits due to underproduction, crude theft, and systemic inefficiencies. Moreover, higher oil prices can intensify inflationary pressure. With the naira already hovering around ₦1,550 to the dollar, increased foreign exchange demand could drive up import costs, worsening inflation. In a country where 88% of exports in 2024 came from oil, the fallout from this Israel-Iran conflict underscores the urgent need for economic diversification and improved resource management.
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