Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), has examined the potential implications of the ongoing Iran–United States–Israel conflict on Nigeria’s economy, noting that the impact could be both beneficial and adverse depending on the duration of hostilities and the strength of domestic policy responses.
In a statement issued on Sunday in Lagos, Yusuf said the escalating tensions have introduced a fresh wave of geopolitical risk into the global economy. He explained that energy markets represent the primary transmission channel of the crisis, given the strategic importance of the Strait of Hormuz, a critical maritime corridor through which about 20 per cent of global crude oil supply passes daily.
According to him, any disruption to this channel would immediately affect global oil prices, shipping costs, insurance premiums, and broader supply chains. He added that Middle Eastern countries play a dominant role in global oil production, meaning that output disruptions could further intensify price volatility.
“For Nigeria, an oil-dependent economy where crude accounts for over 85 per cent of export earnings and roughly half of government revenue, the implications are significant,” Yusuf stated.
He observed that geopolitical tensions in the Middle East have historically triggered sharp increases in crude oil prices due to fears of supply shocks. Speculative pressures surrounding the Strait of Hormuz, he noted, often result in price swings of between $5 and $15 per barrel within short periods.
Yusuf explained that higher oil prices could translate into increased export earnings, stronger foreign exchange inflows, improved external reserves, and higher allocations from the Federation Account Allocation Committee (FAAC) to federal, state, and local governments.
However, he cautioned that potential revenue gains depend heavily on Nigeria’s production capacity. Current crude output fluctuates between 1.4 million and 1.6 million barrels per day—well below installed capacity and constrained by oil theft, pipeline vandalism, and underinvestment in upstream infrastructure.
He further warned of medium-term risks if the conflict escalates and weakens global economic growth, potentially reducing oil demand and triggering price corrections. Nonetheless, he noted that short-term gains could ease pressure on the naira and bolster investor confidence.
