Rising tensions between Israel and Iran are rattling global energy markets, sparking fears that disruptions around the strategic Strait of Hormuz could send oil prices soaring, intensify inflation, and slow economic growth worldwide. Analysts warn that the waterway handles nearly one-fifth of global oil supply, meaning any prolonged blockage could push crude above $100 per barrel and strain both developed and emerging economies.
Former President of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Dele Kelvin Oye, warns that Nigeria must prepare for tougher times as the conflict exposes the nation’s dependence on crude exports and imported fuel, while escalating inflation and household pressure.
Global Impact
“We’re witnessing the worst energy crisis since the 1970s,” Oye said. “The Strait of Hormuz, which carries one-fifth of the world’s oil, is almost shut down. Oil prices are climbing fast and could rise much higher. Slower global growth and higher inflation are inevitable. For Asia, which relies heavily on Hormuz, this is existential. For the rest of the world, it underscores our deep dependence on oil. Energy security must now be a structural priority, not just a crisis response.”
The disruption threatens sharp drops in oil production from Iraq, Kuwait, and Saudi Arabia, with refineries shutting down and shipping forced to take long detours around Africa, driving costs up. “Energy crises quickly become food and trade crises,” Oye added.
Nigeria’s Economic Dilemma
For Nigeria, higher oil prices are a double-edged sword. While crude at $100 per barrel could boost export earnings, the country still relies heavily on imported refined fuel. Fuel prices rise quickly when global markets spike, potentially eroding the benefits of higher revenue.
“The situation is more of a threat than an opportunity,” Oye said. “Reserves may be at a 13-year high, but ordinary Nigerians are already feeling the pain. Transport costs are climbing, food inflation is likely to rise again, and the poor are hit hardest. The government must prioritise household protection over celebrating reserves.”
What Nigerians Will Feel
Oye predicts a sharp rise in the cost of living. Transport fares could increase by 20–30%, food prices by 15–25%, and businesses reliant on diesel generators could face higher operating costs, potentially leading to layoffs or reduced staff. Families may cut back on meals, delay medical care, or pull children from school.
Policy Recommendations
Oye urged urgent relief measures combined with structural reforms:
- Short-term: Stabilise fuel supply via crude-for-product swaps with the Dangote Refinery, expand cash transfers to vulnerable households, impose temporary restrictions on non-essential imports, and maintain tight monetary policy to control inflation while supporting trade finance.
- Medium-term (2 years): Privatisation and full rehabilitation of state-owned refineries, accelerate solar energy rollout, save oil windfalls in the Nigeria Sovereign Investment Authority, and provide targeted subsidies to farmers to ease food price pressure.
“Crisis management must go hand-in-hand with long-term reforms. Transparency and political will are non-negotiable,” Oye concluded.
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