Israel-Iran Conflict Drives Nigerian Petrol Price Hike, Mixed Economic Impacts

The Israel-Iran conflict, escalating since June 13, 2025, has triggered an 8.8% surge in global crude oil prices, from $68 to $74 per barrel, prompting ten Nigerian oil marketers to adjust depot prices upward, with fears of further increases if Iran blocks the Strait of Hormuz, a critical chokepoint for over 20% of global oil and gas shipments. This geopolitical crisis presents Nigeria, Africa’s largest oil producer, with a potential windfall but also significant risks, including higher energy costs, inflation, and economic instability, as outlined by experts and industry stakeholders.

Petrol Price Adjustments: Ten marketers—Aiteo, Pinnacle, Dangote, MENJ, Swift, Rainoil, First Royal, Emadeb, First Fortune, and Ever—raised depot prices in response to the crude price spike. Emadeb saw the highest increase at 2.18%, from N827 to N845 per litre, while Ever had the lowest at 0.46%, from N866 to N870 per litre. Other adjustments include:

• Aiteo: N835 to N840 per litre
• Pinnacle: N829 to N845 per litre
• Dangote: N830 to N840 per litre
• MENJ: N810 to N850 per litre
• Swift: N830 to N845 per litre
• Rainoil: N840 to N850 per litre
• First Royal: N826 to N838 per litre
• First Fortune: N850 to N860 per litre

Petroleumprice.ng predicts continued rises due to global market instability, with Brent crude potentially hitting $120–$130 per barrel in a worst-case scenario, per JP Morgan, if the Strait of Hormuz is blocked, disrupting 18–19 million barrels per day.

Economic Impacts on Nigeria:

• Upsides: Higher crude prices, now at $74 per barrel against Nigeria’s 2025 budget benchmark of $75, could boost foreign exchange earnings (oil accounts for 80% of Nigeria’s forex per CBN 2024) and government revenue (50% of federal budget per NNPC). Professor Wumi Iledare noted this could improve dollar liquidity and naira stability, with the currency appreciating from N1,650/$ to N1,590/$ in June 2025 (CBN). Mazi Colman Obasi of OGSPAN highlighted potential budget surplus if production exceeds 2 million barrels per day, enhancing fiscal consolidation and upstream investment returns.
• Risks: Dr. Muda Yusuf of CPPE warned of surging energy costs driving inflation (33.9% in April 2025, NBS), impacting production, logistics, and power generation. Imported inflation is likely as global energy prices rise, with a 10% oil price increase adding 0.4% to consumer prices annually (FXStreet 2019). Olufemi Idowu emphasized downstream challenges, noting that Dangote Refinery’s international-priced crude purchases under the Crude-for-Naira policy will raise pump prices, increasing goods and services costs despite deregulation. Nigeria’s reliance on imported petroleum products (70% of consumption per NNPC 2024) and pre-sold crude for loans (e.g., $3.3 billion Afreximbank facility) limits gains, as seen during the 2022 Russia-Ukraine crisis.
• Monetary Policy: Yusuf predicted tighter monetary policies globally and in Nigeria, with the CBN’s 27.25% interest rate (May 2025) potentially rising, reducing portfolio flows and pressuring foreign reserves ($23.14 billion, CBN Q1 2025). Increased oil revenue could expand money supply, risking further inflation and naira depreciation if not managed prudently.
• Global Context: A prolonged conflict could depress global markets (S&P 500 down 1.1%, Dow 1.7% on June 13, per NYT), but Nigeria’s stock market may benefit from higher oil prices, historically correlated with GDP growth (NSE All-Share Index up 3% in Q1 2025). However, firms with Middle East supply chains face disruptions, and a Strait closure could spike shipping costs, per maritime sources.

Expert Projections and Warnings:

• JP Morgan: Base-case oil price at $60+ for 2025, but a Strait closure could push Brent to $120–$130, adding 1% to global inflation (Capital Economics).
• Iledare: Sustainable high prices depend on fiscal discipline and refining capacity, warning that without reforms, benefits may be fleeting.
• Idowu: Gains tempered by crude forward sales and Niger Delta instability, with pump price hikes inevitable due to deregulation.
• Yusuf: High energy costs and inflation threaten non-oil sectors, with global economic slowdown risks from Trump’s tariffs and Middle East instability.

Strait of Hormuz Threat: Iran’s threat to block the Strait, through which 20% of global oil flows (EIA), could cause “the biggest oil shock of all time,” per BCA Research, though Iran’s reliance on the Strait for 90% of its 2 million barrels per day exports to China (Kpler 2024) makes this unlikely, per JP Morgan analysts. OPEC+’s 5–6 million barrels per day spare capacity, led by Saudi Arabia and UAE, could offset disruptions, but a multi-front conflict involving Iran-backed Houthis or Hezbollah could paralyze shipping, spiking ocean freight rates (Xeneta).

Current Sentiment and Outlook: Posts on X, such as @Reuters, report Brent crude’s 14% jump on June 13, reflecting market fears, while @pickeringenergy notes a wide range of oil price outcomes ($50–$90+). Nigeria’s economy, heavily oil-dependent (6.8% GDP contribution, NBS 2024), stands to gain from prices above the $75 budget benchmark but risks inflation-driven hardship for consumers, with petrol prices potentially rising 10–25% in weeks (Petroleumprice.ng). The U.S. call for calm and Iran’s vow for a “harsh response” add uncertainty, with OPEC+’s response and Nigeria’s production stability (1.4 million barrels per day, OPEC May 2025) critical to balancing windfall and risks.