War, oil and fragile economies: Why the US–Israel conflict with Iran matters for Nigeria
By Dr Uche Nnadi Fidelis
The recent military confrontation involving the United States, Israel and Iran has triggered shockwaves across global energy markets, reminding the world once again how geopolitical tensions in the Middle East can rapidly reshape economic realities far beyond the region.
What began in late February 2026 as coordinated airstrikes on Iranian military and energy facilities has quickly escalated into a crisis with global economic implications. The conflict has raised fears of disruptions to oil supplies passing through the Strait of Hormuz, the narrow waterway through which roughly one-fifth of the world’s oil supply normally flows.
Energy markets reacted swiftly. Brent crude prices surged above $100 per barrel, briefly reaching $126, as traders responded to fears that shipping through the Persian Gulf could be interrupted. Insurance premiums for oil tankers also rose sharply, while some shipping operators temporarily suspended routes through the strait due to security concerns.
The crisis intensified further when Israeli strikes reportedly damaged infrastructure connected to Iran’s South Pars gas field, one of the largest natural gas reserves in the world. The attacks heightened concerns that supply disruptions could extend beyond oil into global gas markets.
For the global economy, such shocks are rarely isolated events.
Energy is a foundational input for modern economic activity. It powers transportation systems, drives manufacturing industries and supports agricultural production. When oil prices surge, the consequences ripple quickly through supply chains, raising the costs of goods and services worldwide.
Economists warn that sustained energy price shocks could intensify inflationary pressures and complicate the efforts of central banks already struggling to stabilise global prices. Higher fuel costs increase transportation and production expenses, ultimately reducing consumer purchasing power.
Financial markets have already responded with heightened volatility, as investors shift toward energy commodities and traditional safe-haven assets while reducing exposure to sectors vulnerable to rising energy costs.
For Nigeria, Africa’s largest oil producer, the crisis presents both opportunity and risk.
On the surface, higher global oil prices appear beneficial. Oil exports account for approximately 80 percent of Nigeria’s foreign exchange earnings and remain a major source of government revenue. A sustained price rally could therefore strengthen public finances and provide temporary support for the national currency.
However, the benefits are not guaranteed.
Despite its status as a major crude oil producer, Nigeria still imports a significant share of its refined petroleum products. As global crude prices rise, the cost of petrol, diesel and aviation fuel tends to increase domestically as well.
This structural contradiction has long defined Nigeria’s energy economy: an oil-rich country that remains vulnerable to fuel price shocks affecting oil-importing nations.
If global oil prices remain elevated, Nigeria could face rising transport costs and higher prices for food and other essential goods. For millions of citizens already grappling with inflation, such increases could further erode purchasing power and intensify economic hardship.
Nigeria has experienced similar cycles before. Previous oil price surges have often triggered public frustration when domestic fuel prices rise or when government budgets struggle to sustain subsidy programmes designed to shield consumers from global energy shocks.
Beyond the economic impact, the crisis also carries geopolitical implications.
Rising oil prices may strengthen Nigeria’s strategic importance in global energy markets. Western nations seeking to diversify supply away from unstable regions could increasingly look toward African producers such as Nigeria, Angola and Ghana.
At the same time, the crisis may accelerate domestic calls for investment in local refining capacity. Projects such as the Dangote Refinery are expected to reduce Nigeria’s dependence on imported fuel and help shield the economy from external price shocks.
Ultimately, the trajectory of global oil markets will depend on whether the current confrontation escalates into a broader regional conflict or is contained through diplomatic engagement.
If tensions in the Persian Gulf persist and shipping routes remain under threat, oil prices could stay elevated for months. A diplomatic breakthrough, however, could quickly calm markets and restore supply flows.
For Nigeria and other developing economies, the crisis highlights a recurring lesson of global economics: geopolitical conflicts thousands of miles away can profoundly influence domestic prosperity.
Until Nigeria successfully diversifies its economy and reduces its reliance on oil revenues, global energy shocks will continue to shape the country’s economic future.
Dr Uche Nnadi is an International Socio-economic & Political Analyst based in Enugu, Nigeria.
Dr Nnadi writes and comments on global political economy, energy geopolitics, and the economic implications of international conflicts for developing countries, particularly in Africa. His research interests include global oil markets, economic diversification in resource-dependent economies, and the intersection of geopolitics and development policy.
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