Many Nigerians have been asking the same question in recent days: Why is the escalating conflict involving the United States, Israel and Iran affecting petrol prices in Nigeria?
The concern intensified after pump prices of Premium Motor Spirit (PMS), commonly known as petrol, surged to about ₦960 per litre in Abuja and around ₦935 per litre in Lagos, triggering fears of further increases.
While the conflict is unfolding thousands of kilometres away in the Middle East, its ripple effects are already being felt across Nigeria’s economy. The answer lies in how the global oil market works and how Nigeria’s petroleum sector is tied to international crude prices.
The Middle East Crisis and Global Oil Prices
The latest escalation between the United States, Israel and Iran has rattled global energy markets.
Iran is one of the major oil-producing countries in the Middle East, and any conflict involving the country immediately raises fears of disruptions to oil supply routes, particularly through the Strait of Hormuz, a strategic maritime corridor through which a large percentage of the world’s oil shipments pass daily.
As tensions intensified, international crude oil prices surged beyond $80 per barrel, with analysts warning that prices could climb even higher if hostilities persist.
Whenever geopolitical tensions threaten oil supply, global markets react quickly. Traders begin pricing in the risk of shortages, shipping insurance costs rise, and countries scramble to secure supply. All of these factors drive crude prices upward.
And when crude oil becomes more expensive, the cost of petrol also rises.
READ ALSO: US, Israel Strike Iranian Airports, Destroy Aircraft Amid Escalating Conflict
Why Nigeria Still Feels the Impact
For many Nigerians, it seems paradoxical that a country rich in crude oil would experience rising petrol prices because of a war abroad.
However, the reality is that Nigeria’s petrol pricing is closely linked to international oil markets.
Despite being Africa’s largest crude oil producer, Nigeria has historically relied heavily on imported refined petroleum products due to insufficient local refining capacity.
Even as domestic refining capacity improves, petrol prices are still influenced by global crude prices because crude oil is the main raw material used in producing petrol.
When the price of crude rises internationally, refineries around the world, including those supplying Nigeria, face higher production costs. Those costs eventually filter down to marketers, depot owners and ultimately consumers.
The Market Reaction in Nigeria
The global oil rally has already triggered reactions within Nigeria’s downstream petroleum sector.
Industry operators say depot owners and fuel marketers often adjust their prices when crude oil prices spike because selling at old prices could lead to losses when they restock at higher costs.
This market behaviour has led to temporary suspensions of petrol sales by some depot operators in recent days as traders try to avoid selling products below replacement cost.
At the same time, fuel importers and suppliers are factoring in additional risks associated with the crisis, including rising shipping costs and potential supply disruptions.
The Dangote Refinery Factor
Nigeria’s push for energy independence received a boost with the emergence of the massive Dangote Refinery, which has begun supplying refined petroleum products to the domestic market.
However, even local refineries are not immune to global market fluctuations.
Refineries purchase crude oil as feedstock. If crude prices rise internationally, the cost of refining petrol also increases.
This means that even when petrol is produced locally, the pump price can still reflect global crude price trends, especially in a deregulated market where government subsidies have largely been removed.
In recent days, adjustments in refinery gantry prices and depot rates have already begun reflecting the upward pressure created by the international oil rally.
Why Prices Could Rise Further
Energy analysts warn that the situation could worsen if the conflict continues to escalate.
If crude oil prices climb toward $90 per barrel or beyond, Nigeria could experience another round of fuel price increases.
Several factors could push prices higher:
Disruptions to oil shipments in the Persian Gulf
Rising maritime insurance costs
Increased demand for emergency crude supplies
Higher freight charges for petroleum products
All these factors ultimately translate into higher landing costs for petrol in importing countries and higher refining costs globally.
The Wider Economic Impact
For Nigerians, rising petrol prices rarely remain confined to filling stations.
Fuel is a major driver of economic activity in the country. Higher pump prices often trigger a chain reaction across the economy.
Transport fares increase, which raises the cost of moving food and goods across the country. Businesses dependent on petrol or diesel generators face higher operating expenses, and manufacturers often pass these costs on to consumers.
In a country where millions rely on road transport and small-scale businesses depend heavily on fuel-powered generators, the impact can be widespread.
This is why developments in distant oil markets, from the Middle East to Europe, often have immediate consequences for everyday life in Nigeria.
What Nigerians Should Expect
Experts say fuel prices in Nigeria will likely remain volatile for as long as tensions in the Middle East persist.
If diplomatic efforts succeed in calming the conflict, global oil prices could stabilise, easing pressure on petrol prices.
However, if hostilities escalate further or threaten oil supply routes, Nigerians may have to brace for more upward adjustments in fuel prices.
In the interconnected world of energy markets, a war thousands of kilometres away can still shape the price Nigerians pay at the pump.
And for now, the Israel–Iran crisis has become another reminder of how deeply Nigeria’s economy remains tied to the global oil market.