Nigeria could face renewed inflationary pressure as rising global crude oil prices threaten to push up the cost of petrol, transportation and essential goods, even as the Federal Government stands to benefit from higher oil earnings.
The latest rally in the international oil market follows the escalating conflict between the United States and Iran, with concerns that disruptions to Middle East oil supplies could keep crude prices elevated. Nigeria’s Bonny Light crude has climbed above $100 per barrel for the first time since May, significantly exceeding the benchmark used in the country’s 2026 budget.
While the development presents an opportunity for increased government revenue, analysts caution that the economic gains may be offset by the impact on consumers. Under Nigeria’s deregulated downstream petroleum market, higher crude prices are expected to translate into more expensive imported fuel, increasing the likelihood of another rise in pump prices.
The 2026 budget was based on an oil price of $64.85 per barrel, daily production of 1.84 million barrels and an exchange rate of N1,400 to the US dollar. With crude trading roughly $35 above that projection, the government could realise substantial additional revenue if export volumes remain stable.
However, production remains below target. Figures from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicate that the country is currently producing about 1.7 million barrels of crude oil per day, including condensates, a shortfall that could reduce the expected fiscal gains.
Industry operators say the immediate concern for Nigerians is the effect on fuel prices. As crude becomes more expensive on the global market, the cost of importing refined petroleum products rises, prompting marketers to adjust depot and retail prices accordingly.
Managing Director of Petroleumprice.ng, Jeremiah Olatide, said expectations of lower fuel prices following the resumption of naira-denominated sales by the Dangote Petroleum Refinery had been overtaken by developments in the global oil market.
He noted that although some importers had begun reducing prices, the sudden increase in crude oil prices had introduced fresh uncertainty and could trigger renewed volatility in the downstream sector.
National President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), Mazi Colman Obasi, also warned that the effects would extend beyond filling stations, saying households and businesses would likely face higher operating costs once adjustments filter through the supply chain.
Market data from Petroleumprice.ng showed that before the latest spike in crude prices, several depots in Lagos, Warri and Calabar had reduced loading prices, while pump prices in Lagos currently range between N1,300 and N1,400 per litre, depending on location. Analysts say any further increase in international oil prices could quickly reverse that trend and place additional pressure on the cost of living across the country.
