By Arinzechi Chukwunonso
Rising global oil prices driven by tensions in the Middle East may offer only temporary relief for Nigeria and other oil-producing economies, according to fresh warnings from the International Monetary Fund and the United Nations.
The caution comes amid growing concerns over disruptions linked to the ongoing Iran conflict, particularly the closure of the Strait of Hormuz — a critical global shipping route — which has significantly driven up freight and energy costs.
Executive Director of the International Trade Centre, Pamela Coke-Hamilton, said while oil exporters like Nigeria may see short-term revenue gains from higher crude prices, the broader economic benefits are likely to be limited.
She noted that many of these countries, including Nigeria, remain net importers of refined petroleum products, meaning increased earnings from crude exports could be offset by rising import costs.
Global oil markets have remained volatile in recent days, with prices briefly surging above $100 per barrel following the collapse of U.S.-Iran peace talks and renewed geopolitical tensions. However, prices have since retreated, highlighting the fragile and unpredictable nature of the current rally.
The IMF has already adjusted Nigeria’s economic outlook, cutting its 2026 growth forecast to 4.1 per cent. The Fund warned that higher energy prices, coupled with increased shipping and logistics costs, would weigh heavily on economic activity — particularly in non-oil sectors.
Chief Economist of the IMF, Pierre-Olivier Gourinchas, said the downgrade reflects mounting pressures across Sub-Saharan Africa, including rising inflation and weakening growth momentum.
Further compounding the challenge, the IMF noted that war-driven spikes in fuel and fertilizer costs could dampen productivity and strain household incomes, even as governments benefit from improved oil revenues.
While Nigeria’s 2026 budget is benchmarked at $64.85 per barrel, current market volatility underscores the uncertainty surrounding sustained gains from oil exports.
With global supply chains under pressure and energy markets reacting sharply to geopolitical developments, analysts warn that any windfall from higher oil prices could be short-lived — offering limited long-term support for economic stability.
