Expert Speaks on What US-Israeli Attack on Iran Means for Nigerian Economy
- The US-Israeli attack on Iran affects the Nigerian economy, especially the naira and oil revenues
- The war brings with it an opportunity for Nigeria to earn higher, but it may also increase the cost of living
- An expert believes higher international oil prices could drive the cost of petrol at filling stations
Legit.ng journalist Dave Ibemere has experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Muda Yusuf, the Chief Executive Officer for the Centre for the Promotion of Private Enterprise (CPPE), has stated that Nigeria could face mixed economic outcomes in the ongoing war between Iran, the United States, and Israel.
According to Yusuf, the war could affect the naira, oil revenue, and inflation.
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In a statement made available to Legit.ng, he said the conflict has heightened fears of disruption in the Strait of Hormuz, a strategic corridor through which nearly 20% of global crude oil supply passes daily.
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Insight into how the war affects Nigeria, good and bad
For Nigeria, where crude oil accounts for over 85% of export earnings and about half of government revenue, the implications are significant.
Yusuf said:
“The immediate benefits include Higher crude export receipts, Improved foreign exchange inflows, Strengthening of external reserve and Increased FAAC allocations to all tiers of government”
The CPPE boss stated that geopolitical shocks in the Middle East often push crude prices up sharply, sometimes by $5–$15 per barrel within days.
“However, revenue gains are critically dependent on production levels. Nigeria’s current crude output has fluctuated around 1.4–1.6 million barrels per day, below installed capacity and vulnerable to oil theft, pipeline vandalism, and underinvestment in upstream infrastructure.
“Without a sustained improvement in production efficiency and security, Nigeria may not fully optimise any price windfall.”
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Exchange Rate Implications
CPPE boss explained that the net effect on the exchange rate will hinge on whether stronger oil inflows outweigh potential capital reversals, the report added.
Higher oil prices typically strengthen Nigeria’s current account balance and improve foreign exchange liquidity. This could reduce short-term pressure on the naira and reinforce investor confidence.
"In recent years, exchange rate stability has been closely tied to oil receipts and capital inflows. Boost gross external reserves Enhance FX market liquidity, Reduce speculative pressure on the currency
"However, geopolitical instability also triggers global risk aversion. During periods of uncertainty, capital tends to migrate toward safe-haven assets such as US Treasury securities and gold. Emerging markets frequently experience portfolio outflows in such episodes."
CPPE urged fiscal prudence, warning against the historic cycle of spending booms followed by fiscal stress.
Recommendations include saving part of the oil windfall, accelerating the expansion of refining capacity, and deploying targeted social protection.
“Nigeria’s heavy reliance on oil exports amplifies its exposure, underscoring the urgency of economic diversification.”
Higher fuel prices
He also noted that the rising tension between US and Iran could also bring more pains for Nigerians at the pumps.
Yusuf explained:
"Nigeria operates a deregulated downstream petroleum regime, meaning higher international crude oil prices translate directly into increased petrol, diesel and aviation fuel costs.
"The likely transmission channels include rising pump prices, increased transportation and logistics costs, higher food distribution expenses, and escalating manufacturing and operational costs across sectors."
Naira falls against the US dollar
Earlier, Legit.ng reported that the Nigerian currency, the naira, began the new month with a loss of N17, which was carried over from trading on Friday, February 27, 2026.
The development follows the dollar mop-up by the Central Bank of Nigeria (CBN), aiming to narrow the yawning gap between the official and parallel markets.
Proofreading by James Ojo, copy editor at Legit.ng.
Source: Legit.ng
