The Nigerian Economic Summit Group (NESG) has projected that rising geopolitical tensions in the Middle East could deliver a major oil revenue windfall for Nigeria, potentially reaching N30.2 trillion if the conflict between Iran and Israel persists.
The projection was outlined in a report titled “Boom Not Gloom: Nigeria’s Optimal Policy Response to the US/Israel-Iran War,” released on Thursday by the policy think tank.
The report examined the potential economic impact of escalating geopolitical tensions involving United States, Israel, and Iran on oil-producing economies, noting that higher global crude prices could significantly boost Nigeria’s export earnings.
According to the NESG, the ongoing conflict presents Nigeria with a rare but temporary opportunity to strengthen its macroeconomic position by leveraging elevated oil prices.
“The US/Israel–Iran conflict presents Nigeria with a time-limited opportunity to turn an external shock into a consolidation of hard-won macroeconomic stability,” the report stated.
The group advised policymakers to manage the situation carefully to maximise the benefits while limiting potential economic disruptions.
It recommended that the Central Bank of Nigeria avoid overly aggressive monetary tightening in response to supply-driven inflation shocks. Instead, the report suggested sterilising excess liquidity in the financial system and allowing the naira to adjust in line with market fundamentals.
The think tank also stressed the importance of clear communication from both fiscal and monetary authorities to stabilise investor expectations and prevent unnecessary market volatility.
NESG estimates suggest that the fiscal gains from higher oil prices will depend largely on how long the conflict lasts and how severely it disrupts global energy markets.
In a short-lived conflict scenario, Nigeria could earn an additional N2.3 trillion in oil revenue. However, if hostilities persist and significantly tighten global oil supply, the windfall could rise to as much as N30.2 trillion.
Higher oil export revenues could also strengthen Nigeria’s external reserves and support the stability of the naira by increasing foreign exchange inflows.
Despite the potential gains, the report warned that rising global energy prices could also trigger inflationary pressures within Nigeria.
According to the NESG, higher fuel and transportation costs could push the country’s headline inflation up by between 1.3 and 5.2 percentage points, creating new challenges for policymakers.
The think tank therefore advised the government to save excess oil revenues and ring-fence windfall gains to strengthen fiscal buffers.
It also warned that the run-up to Nigeria’s 2027 election cycle could test the government’s commitment to fiscal discipline, noting that previous oil booms often led to increased spending that weakened long-term fiscal stability.
Global oil markets have already reacted to the rising tensions. Brent crude prices surged on Thursday, climbing nearly 4.9 percent to $96.45 per barrel after briefly crossing the $100 mark earlier in trading.
Meanwhile, the International Energy Agency (IEA) has agreed to release 400 million barrels from strategic reserves in an effort to stabilise global oil markets.
