The Nigerian Economic Summit Group (NESG) has stated that Nigeria has the potential to benefit from the conflict between the United States/Israel and Iran, potentially earning between N2.3 trillion in a short-term shock and up to N30 trillion if the conflict persists.
The NESG, however, said in a policy brief published today that this will depend on the country’s policy response to the crisis.
During the week, the federal government announced that it is closely monitoring the escalating geopolitical tensions in the Middle East and remains committed to safeguarding Nigeria’s economic stability, reports The Guardian.
The NESG said the escalation of tensions between the United States/Israel, and Iran has triggered the most significant global energy shock since the Russia–Ukraine war, noting that for Nigeria, the implications are mixed.
According to the group, “Higher global oil prices could generate a substantial fiscal windfall and strengthen foreign exchange (FX) inflows. At the same time, rising global energy prices may translate into domestic inflation through higher fuel and logistics costs.”
It noted that Nigeria’s geographic position as an Atlantic crude exporter provides it a degree of insulation from disruptions in the Strait of Hormuz, one of the world’s most critical energy chokepoints.
“This means Nigeria can benefit from higher oil prices without facing the direct supply disruptions experienced by Gulf producers”, it said.
“Under plausible scenarios, Nigeria could record additional oil revenues ranging from about N2.3 trillion under a short-lived shock to as much as N30 trillion if the conflict becomes prolonged. However, the upside is not guaranteed.”
It noted that structural constraints in the oil sector, inflationary pressures from higher energy prices, and election-cycle spending pressures could limit the benefits if policy responses are poorly calibrated.
NESG argued that Nigeria can convert the crisis into an opportunity to strengthen macroeconomic stability if policymakers respond with discipline.
It recommended that the country save the windfall, maintain monetary discipline, strengthen external buffers, and protect vulnerable households through targeted support rather than broad price controls.
“If carefully managed, the crisis could consolidate Nigeria’s recent reform progress”, it said, adding “Conversely, a weak policy response risks repeating the country’s historical boom-bust pattern, where oil windfalls translate into rapid spending expansions that erode fiscal discipline and destabilise the macroeconomy.”
In a related brief, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf said Nigeria needs to strengthen its local oil refining capacity.
He said for decades, Nigeria relied heavily on imported petroleum products despite being a major crude oil producer. This paradox, he said, exposed the country to significant supply chain risks and frequently resulted in fuel shortages and long queues at filling stations during periods of global supply disruptions.
He noted that domestic refining serves as a critical buffer against disruptions in global energy supply chains.
He said given the strategic importance of domestic refining to Nigeria’s energy security, external sector stability and industrial development, it is essential that the policy environment remains supportive of investment in the sector.
“Government policy should continue to encourage domestic refining through a coordinated mix of trade policy, fiscal policy and monetary policy measures”, he noted, adding that priority areas should include ensuring reliable crude supply arrangements, strengthening petroleum distribution infrastructure, introducing tariff protection, encouraging additional refining investments, and promoting export competitiveness for refined petroleum products.
The Minister of Finance and the Coordinating Minister of the Economy, Mr Wale Edun, who announced the government’s response to the crisis, said the Economic Management Team (EMT), which he chairs, is maintaining close coordination across fiscal, monetary, and energy policy institutions, with policy options under continuous review to mitigate volatility and shield households and businesses from external shocks.
He noted that careful policy calibration will remain central to the government’s response, ensuring external developments do not undermine recent gains in macroeconomic stabilisation and growth.
He assured the public that the government remains vigilant and proactive, and will take all necessary steps to preserve Nigeria’s economic stability and sustain its growth trajectory.
