Israel-Iran Tensions and Nigeria’s Economic Firewall By Umar Farouk Bala
The recent escalation of hostilities between Israel and Iran has sent ripples through global markets, jolting energy prices, unsettling investor confidence, and reshaping inflation forecasts across continents.
While much of the world braces for volatility, Nigeria is quietly turning adversity into advantage—thanks to an unprecedented level of domestic fuel self-sufficiency, driven by the expanding operations of local refineries, particularly the Dangote Petroleum Refinery.
Following the outbreak of the conflict, crude oil prices surged from $65 to $75 per barrel—a 15 percent jump within days. For most nations, this spells trouble. But for Nigeria, which relies heavily on oil exports, this spike offers a crucial economic boost at a most opportune time.
For decades, Nigeria’s overdependence on imported petroleum products made it especially vulnerable to global shocks. Each time tensions flared abroad, Nigerians could predict the painful aftermath: petrol scarcity, endless queues, soaring prices, and an economy strained by avoidable dependency.
The Russia-Ukraine war in 2022 was a vivid reminder. Fuel queues snaked through city centers for days. Motorists slept in vehicles, only to return home empty-handed. Premium Motor Spirit (PMS) prices soared, adding pressure to households already battling inflation.
But today, a new narrative is emerging—fueled by rising local refining capacity and economic foresight. The 650,000-barrel-per-day Dangote Petroleum Refinery, operating at near full capacity, is at the center of this transformation.
Alongside the revival of other domestic refineries, it is rewriting Nigeria’s economic playbook. According to the National Bureau of Statistics (NBS), Nigeria’s petrol import bill fell sharply from $2.6 billion in Q1 2024 to just $1.2 billion in Q1 2025—a staggering 54 percent year-on-year decline.
This marks the lowest import expenditure since 2020 and reflects a structural shift in how the country meets its energy needs. The numbers are profound. In August 2024, Nigeria imported 44.6 million litres of petrol daily. By mid-April 2025, that figure had dropped to just 14.7 million litres.
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Meanwhile, domestic production surged by 670 percent, with local refineries now churning out 26.2 million litres per day. The Dangote Refinery alone supplies over 30 million litres daily, satisfying up to 60 percent of national demand. This shift is not only saving billions but is also reinforcing Nigeria’s macroeconomic foundations.
Higher global oil prices mean stronger foreign exchange inflows. Since oil accounts for nearly half of government revenue and remains the largest source of forex earnings, this windfall is enhancing fiscal stability and economic confidence.
President Bola Tinubu’s decision in 2023 to float the Naira was a bold gamble. But with increasing oil revenues and reduced import pressure, the Naira has shown relative resilience, hovering around ₦1,500 to the dollar. This newfound stability may pave the way for gradual appreciation as oil exports grow.
Furthermore, higher revenues could accelerate fiscal consolidation. Nigeria’s debt, especially crude-backed loans, may be repaid more swiftly. That, in turn, could free up resources for strategic investments in education, healthcare, infrastructure, and national security.
Beyond economic indicators, the current geopolitical crisis is rekindling interest in Nigeria’s upstream oil and gas assets. As global investors seek safer and more profitable energy frontiers, Nigeria is regaining attention—mirroring the boom era of the early 2000s under President Olusegun Obasanjo.
This could usher in new investments, job creation, and industrial expansion—key drivers of poverty reduction and inclusive growth. Most importantly, Nigeria is no longer as exposed to global supply chain disruptions. Citizens are increasingly insulated from the shocks once imposed by distant conflicts or foreign oil cartels.
The fuel pump no longer serves as a symbol of helplessness. While the Israel-Iran conflict remains a source of global anxiety, Nigeria is proving that with vision, investment, and strategic policy alignment, crisis can be turned into opportunity.
The country now stands at the crossroads of transformation. With oil export earnings rising and fuel import dependence falling, Nigeria has a rare chance to stabilize its currency, reduce inflation, and chart a more self-reliant path forward.
In a world where developing economies often suffer most during geopolitical crises, Nigeria’s rising energy self-sufficiency offers a different story—one of resilience, preparedness, and possibility. If this momentum is sustained, Nigeria may finally break free from the cycles of boom and bust, and move steadily toward economic sovereignty and long-term prosperity.
Umar Farouk Bala is a serving NYSC corps member at the PRNigeria Centre, Abuja.
He can be reached via: [email protected]
