Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), has highlighted the potential economic implications of the escalating conflict involving Iran, the United States, and Israelfor Nigeria.
Speaking on Sunday in Lagos, Yusuf said the effects could be both positive and negative, depending on the conflict’s duration and the effectiveness of domestic policy responses.
He identified energy markets as the primary channel of impact, highlighting the strategic importance of the Strait of Hormuz, through which about 20 per cent of the world’s crude oil supply passes daily. “Any disruption to this corridor would immediately affect global oil prices, shipping costs, insurance premiums, and supply chains,” he said.
Yusuf noted that oil-producing countries in the Middle East play a key role in global crude output. For Nigeria, an oil-dependent economy where crude contributes over 85 per cent of export earnings and roughly half of government revenue, such developments carry significant implications.
“Historically, geopolitical tensions in the Middle East trigger sharp increases in crude prices due to fears of supply disruptions,” he explained. “Speculative risks around the Strait of Hormuz typically generate short-term price volatility of $5–$15 per barrel.”
For Nigeria, every rise in crude prices translates into higher export earnings and government revenue. Yusuf said the immediate benefits could include stronger foreign exchange inflows, improved external reserves, and increased FAAC allocations across all tiers of government.
However, he cautioned that these gains depend on production efficiency. “Nigeria’s current crude output, fluctuating between 1.4 million and 1.6 million barrels per day, remains below installed capacity and is vulnerable to oil theft, pipeline vandalism, and underinvestment in upstream infrastructure. Without improvements, the country may not fully capitalise on any price windfall,” Yusuf said.
Looking ahead, Yusuf also highlighted medium-term risks. If the conflict escalates and dampens global growth, oil demand could weaken, potentially leading to price corrections. He added that in the short term, the developments could ease pressure on the naira and bolster investor confidence.