US/Israel vs Iran War: Another Oil Shock Lesson for Nigeria By Umar Farouk Bala
The protracted conflict involving the United States, Israel, and Iran—triggered when U.S. and Israeli forces launched coordinated strikes on Iran on February 28, 2026—has once again shaken global energy markets, sending crude oil prices soaring and exposing the vulnerability of energy-dependent economies.
In recent days, crude prices surged toward $120 per barrel, with Iranian officials threatening that oil could climb as high as $200 if the conflict intensifies and the Strait of Hormuz remains disrupted.
For Nigeria—one of the world’s top oil producers—such threats should, in theory, have little direct impact on the price of fuel at home. Yet the reality is quite the opposite. The paradox lies in Nigeria’s longstanding neglect of domestic refining.
Petrol prices have surged across the country, rising from around ₦840–₦890 per litre to well above ₦1,250 in many locations. Businesses are already bracing for higher transportation costs, rising production expenses, and renewed inflationary pressures.
But beyond the immediate economic strain lies a deeper lesson: this crisis is yet another wake-up call for Nigeria to achieve genuine energy self-sufficiency.
Fuel sits at the heart of Nigeria’s economic life. In the absence of reliable electricity from the national grid, petrol and diesel power transportation, small businesses, agriculture, and electricity generation for millions of households and enterprises.
When petrol prices spike, the ripple effects spread rapidly through the economy. Transport fares increase, food distribution becomes more expensive, manufacturing costs rise, and inflation inevitably follows.
The current Middle East conflict has triggered exactly this chain reaction. As tensions escalate and shipping routes in the Persian Gulf grow increasingly dangerous, global oil markets have tightened.
For countries that rely entirely on imported fuel, such shocks are inevitable. But Nigeria is not supposed to be one of those countries.
Despite being a major crude oil producer and a member of the Organization of the Oil Producing Countries (OPEC), Nigeria remains deeply vulnerable to global energy shocks. The reason is simple: the country exports crude oil but lacks sufficient capacity to refine it domestically.
For decades, Nigeria’s state-owned refineries in Warri, Port Harcourt, and Kaduna have operated far below capacity or remained idle due to years of neglect, mismanagement, and failed rehabilitation efforts.
If these refineries had been properly maintained and consistently modernized, Nigeria would be refining the bulk of its fuel locally today. That alone would significantly reduce the country’s exposure to international market volatility.
Instead, Nigeria has long depended on imported refined products, tying its domestic energy market directly to global price fluctuations and geopolitical crises far beyond its borders.
The current Middle East conflict is simply the latest example of how costly that dependence has become.
The commissioning of the Dangote Petroleum Refinery was widely celebrated as a potential turning point in Nigeria’s energy story. With a refining capacity of about 650,000 barrels per day, it is the largest refinery in Africa and theoretically capable of meeting most of Nigeria’s fuel demand.
However, even this landmark private investment cannot fully shield Nigeria from global volatility without stronger government support.
At present, less than 40 percent of the refinery’s crude oil input comes from Nigeria under the naira-for-crude arrangement. The majority of the crude processed at the refinery is sourced from abroad, including shipments from the United States and other markets.
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In some cases, the irony is striking: Nigeria exports its crude to international traders, who then resell the same crude to the refinery at global prices after adding their margins.
Those additional costs eventually find their way back to Nigerian consumers at the pump.
If Nigeria truly wants energy stability, domestic refineries must receive reliable and affordable access to Nigerian crude. Without that structural reform, even the largest refinery on the continent will remain tied to global price volatility.
The current Middle East crisis is not the first global event to disrupt Nigeria’s economy. The oil shocks of the 1970s, the Gulf War, sanctions crises, the Russia-Ukraine war, and now the U.S.–Israel conflict with Iran have all demonstrated how geopolitical tensions can destabilize global energy markets.
Each time such crises occur, Nigeria experiences the same pattern: rising fuel prices, inflationary pressure, and economic strain on households and businesses.
These recurring shocks should have long ago forced a decisive shift toward domestic energy resilience. Yet the country continues to face the same structural weaknesses.
The lesson from the current crisis is clear: Nigeria must accelerate its pursuit of energy self-sufficiency.
This message is particularly relevant for the administration of President Bola Ahmed Tinubu, whose government has already demonstrated a willingness to pursue bold and sometimes politically difficult reforms.
From the removal of the long-standing fuel subsidy to the liberalisation of Nigeria’s exchange rate regime, the administration has shown that it is prepared to confront structural distortions that previous governments avoided.
That reformist momentum is already visible in the oil sector itself. On February 13, 2026, President Tinubu signed an executive order directing that oil and gas revenues owed to the federation be remitted directly into the Federation Account, eliminating multiple layers of deductions previously retained within the petroleum sector.
By restructuring how petroleum revenues are collected and remitted, the administration signaled a willingness to confront long-standing inefficiencies in Nigeria’s oil governance framework. Such pragmatism is precisely what will be required to finally address the country’s refining deficit.
If any administration possesses both the reformist momentum and political courage to break Nigeria’s cycle of external energy dependence, it is the current one.
Achieving energy security will require decisive follow-through. The long-delayed rehabilitation of the Warri, Port Harcourt, and Kaduna refineries must be completed and followed by transparent and commercially viable operations.
Policies must also guarantee consistent crude supply to domestic refineries, particularly the Dangote facility and emerging modular refineries.
Expanding and strengthening the naira-for-crude arrangement will also be essential so that Nigerian refineries rely primarily on local feedstock rather than imported crude. Energy security is not merely an economic objective; it is a strategic necessity.
Ironically, rising global oil prices could increase Nigeria’s export revenue in the short term. But without strong domestic refining capacity, those gains will continue to be offset by higher fuel costs at home.
The current Middle East conflict should therefore be viewed not only as a geopolitical crisis but also as a strategic warning.
Every time a distant war determines the price of petrol in Nigeria, it reveals how incomplete the country’s energy independence remains.
If the right lessons are drawn from this moment, the Tinubu administration can transform this crisis into an opportunity to finally build a resilient domestic energy system.
If not, the next global conflict will deliver the same painful reminder all over again.
Umar Farouk Bala is a political and foreign affairs analyst. He writes from Abuja and can be reached at: [email protected].
