Contributed by Canada-based Nigerian entrepreneur and independent financial advisor, Prince Kayode Olaide—fondly known as ‘Sir K’.
The recent escalation of hostilities between Israel and Iran, culminating in Israeli airstrikes on Iran’s vital oil and gas facilities, has sent ripples through the global energy market.
As one of the world’s top producers of crude oil and natural gas, any disruption to Iran’s energy sector inevitably impacts supply and demand dynamics on a global scale.
Iran currently ranks as the fifth-largest oil producer in the world, the third-largest within the OPEC bloc, and the second-largest producer of natural gas globally. With these statistics in mind, the consequences of a conflict affecting its production capacity are not difficult to imagine.
On June 12, 2025, global benchmark prices for energy commodities stood at moderate levels: Brent crude was selling at $69.86 per barrel, West Texas Intermediate (WTI) crude at $68.29 per barrel, Henry Hub natural gas at $3.52 per million British thermal unit (MMBtu), and the Japan-Korea Marker (JKM) at $12.504 per MMBtu.
However, within a span of just two days, by June 14, these prices had surged notably.
Brent crude jumped to $74.77 per barrel, WTI climbed to $73.77, Henry Hub natural gas inched up to $3.54, while JKM rose to $13.39 per MMBtu. This upward trend is expected to continue if the conflict remains unresolved or further intensifies.
For Nigeria, a nation heavily dependent on crude oil exports for foreign exchange earnings, the situation presents both opportunities and challenges.
Currently, Nigeria holds a production quota of 1.5 million barrels per day (mbpd) under the OPEC+ agreement.
Encouragingly, it is slightly exceeding this target, producing 1.533 mbpd. With rising global prices, this level of output promises higher revenue inflow, particularly at a time when the country is struggling with revenue shortages and heightened fiscal pressure.
These revenues could potentially support critical infrastructure projects and help in repaying outstanding debts if well-managed.
In the natural gas sector, Nigeria’s performance has also been significant. In April 2025, the country produced a total of 228,309.16 million cubic feet (MMcf) of gas, including both associated and non-associated gas.
Of this, 64,356.07 MMcf was utilized directly in the oilfields, 64,097.82 MMcf was sold within the domestic market, 83,370.24 MMcf was exported, and 16,485.04 MMcf was flared.
Rising international gas prices are likely to improve Nigeria’s LNG earnings from exports to Europe and Asia.
However, a critical issue remains: how can Nigeria enjoy this foreign earnings boost without adversely affecting its own citizens?
The challenge lies in the reality that, despite being a top producer, Nigeria remains dependent on the importation of refined petroleum products.
With Brent crude now trading at higher levels, domestic refineries like the Dangote Refinery, as well as modular refineries, may be compelled to purchase feedstock at elevated global rates.
This could translate into a steep rise in the cost of refined products such as petrol, diesel, and aviation fuel for local consumers.
Without any form of intervention, this development would push fuel pump prices higher, potentially triggering inflation and adding to the economic burden on Nigerian households already grappling with high costs of living.
This looming dilemma calls for urgent policy decisions. One critical question is whether the Nigerian government, in collaboration with the Nigerian National Petroleum Company Limited (NNPCL), would consider providing domestic crude oil at discounted rates to local refineries.
Such a move could stabilize the cost of refined products and mitigate inflationary pressures on consumers. Otherwise, the government risks triggering public discontent and social unrest due to unaffordable fuel prices.
Given the circumstances, the government is now faced with a delicate balancing act. On one hand, there is a rare opportunity to leverage higher oil and gas prices to increase foreign earnings, reduce fiscal deficits, fund critical infrastructure, and meet debt obligations.
On the other hand, a complete focus on maximizing export profits without cushioning the domestic economy could deepen internal socio-economic challenges.
Some economic observers are of the view that part of the windfall revenue should be earmarked for fuel price stabilization and targeted subsidies, especially to protect the transport and power sectors.
Others suggest the establishment of a temporary price stabilization fund, solely funded from excess crude revenue, to protect the most vulnerable segments of the population.
Another strategic response would involve ramping up investment in domestic gas infrastructure to encourage a switch from petrol and diesel to compressed natural gas (CNG) and liquefied petroleum gas (LPG), thereby reducing Nigeria’s reliance on imported refined fuel.
This move would not only be cost-effective in the long run but also more environmentally sustainable.
In conclusion, while the crisis in the Middle East brings about a favorable market condition for Nigeria’s crude oil and gas exports, the situation demands prudent, compassionate, and forward-looking economic management.
The Nigerian government must not be tempted to exploit the oil price surge solely for immediate fiscal gains. Instead, it should adopt a balanced policy that safeguards local consumers while also strengthening the country’s financial capacity to deliver on its development agenda.
The actions taken in the coming weeks could very well determine the trajectory of Nigeria’s economic stability in the face of yet another global energy crisis.
INN-HOUSE☆ 