US vs Iran: Expert reels out economic gains, risks for Nigeria

As tensions escalate between Iran, the United States and Israel, economic analysts are turning their attention to countries like Nigeria that could feel both the benefits and the backlash of the unfolding crisis.

Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), says the ripple effects on Nigeria will depend largely on how long the conflict lasts and how well domestic policies respond to the shocks.

At the heart of the global concern is the Strait of Hormuz  a strategic corridor through which nearly 20 per cent of the world’s crude oil passes daily. Any disruption to this route could trigger immediate spikes in oil prices, shipping costs, insurance premiums and supply chain expenses.

For Nigeria, that scenario presents a mixed blessing.

As an oil-dependent economy where crude oil accounts for more than 85 per cent of export earnings and roughly half of government revenue, rising global oil prices could mean a short-term windfall. Historically, geopolitical crises in the Middle East have pushed crude prices up by between $5 and $15 per barrel within a short period due to fears of supply shortages.

If that happens again, Nigeria could enjoy increased export earnings, stronger foreign exchange inflows, improved external reserves and higher allocations from the Federation Account Allocation Committee (FAAC).

The naira could also experience temporary relief from exchange rate pressures, while investor confidence might improve on the back of stronger oil receipts.

However, the upside is not automatic.

Nigeria’s crude production has been fluctuating between 1.4 and 1.6 million barrels per day well below its installed capacity. Persistent oil theft, pipeline vandalism and underinvestment in upstream infrastructure continue to limit output. Without improvements in security and production efficiency, the country may struggle to fully capitalise on any surge in global oil prices.

Beyond oil revenue, there are broader economic implications. Higher global oil prices could translate into increased fuel import costs, higher transportation expenses and renewed inflationary pressures  particularly if global shipping routes become more expensive due to security risks.

There is also the medium-term risk. If the conflict deepens and begins to slow global economic growth, oil demand could weaken. In that case, prices may retreat sharply after an initial spike, leaving oil-dependent economies like Nigeria exposed once again.

The situation underscores a recurring lesson for Nigeria: global oil shocks can provide temporary relief, but they also highlight the structural vulnerabilities of an economy heavily reliant on crude exports.

Ultimately, whether the Iran–U.S.–Israel conflict becomes an opportunity or a setback for Nigeria will depend not just on events in the Middle East, but on the country’s ability to boost production, safeguard infrastructure and accelerate economic diversification at home.