As global crude oil prices surge above $100 per barrel following the blockade of the Strait of Hormuz, Nigerian households and businesses are bracing for a prolonged period of economic pain.
The Strait of Hormuz, a critical maritime route through which about 20 per cent of the world’s oil and gas supply passes daily, has been gripped by tension following a standoff between the United States and Iran.
Iran had announced the reopening of the Strait on Friday, April 17, sending relief signals to the global oil market and a subsequent drop in crude prices.
Experts had expressed optimism that domestic fuel prices would drop. However, this joy was short-lived as Iran announced hours later on Saturday, April 18, the closure of the Strait again, citing a breach by the United States. President Trump reportedly ordered the U.S. naval blockade of the Strait.
The Islamic Revolutionary Guard Corps (IRGC) said in a statement on Saturday that until the U.S. withdraws from the Strait, it will remain under tight control.
In the latest escalation, President Trump said he has ordered the U.S. Navy “to shoot and kill any boat” that is laying mines in the Strait of Hormuz. He also threatened that the area would remain sealed until Iran made a deal.
The resulting disruption fears have jolted global oil markets, sending benchmark crude prices soaring again.
According to the price update on OilPrice.com, the global benchmark, Brent Crude, has reached $106.9 as of Friday, April 24. This reflects a surge of over 58 per cent compared to the price in April last year.
The U.S. West Texas Intermediate (WTI) has risen to $97.28 per barrel from about $80 over the weekend.
Inflation Fears
This has reignited concerns over a further hike in fuel prices and, consequently, a surge in the inflation rate in import-dependent economies like Nigeria.
Despite being Africa’s largest oil producer, Nigeria grapples with soaring domestic fuel prices. Even though Nigeria produces crude, it remains sensitive to global landing costs as domestic prices are still benchmarked against the international market.
Since the Dangote Refinery adjusted its ex-depot price to ₦1,200 per litre in recent weeks, petrol pump prices in Nigeria have been between ₦1,225 and ₦1,400 per litre across major cities, a near doubling of prices since the Middle East conflict escalated in March.
Analysts warn that if the deadlock persists, prices could exceed ₦1,600 per litre, especially in border regions, which are often the worst hit during supply disruptions.
The surge has triggered an immediate hike in transportation fares and the cost of goods, as commercial drivers and small business owners struggle to maintain profit margins.
For millions of Nigerians who rely on public transportation, this could translate into higher daily commuting costs, further eroding disposable income.
Small business owners are also bracing for impact. From food vendors to logistics firms, the cost of fuel plays a critical role in operational expenses. Economic experts warn that a sustained increase in petrol prices could trigger a domino effect, pushing up the prices of goods and services across the board.
Recent data released by the National Bureau of Statistics revealed that Nigeria’s headline inflation rose slightly from 15.06 per cent in February to 15.38 per cent in March, while the food inflation rate increased to 14.31 per cent from 12.12 per cent in the preceding month.
Nigeria’s Paradox: High Prices, Low Gains
Jide Pratt, Country Manager, TradeGrid, said that while Nigeria was supposed to gain from the oil windfall, the price of refined fuel has eroded the gain as ordinary citizens are feeling the pinch.
Bismarck Rewane, an economist and CEO of Financial Derivatives Company, warned that Nigeria may struggle to capitalize on the price surge due to structural bottlenecks, including declining production levels (currently around 1.3 million barrels per day) and pre-sold crude contracts.
The ripple effects have extended to the aviation sector, where jet fuel costs have pushed domestic carriers to the edge of collapse.
Jet A1 (aviation fuel) prices have reportedly surged by about 300 per cent from ₦900 to ₦3,300 per litre in recent weeks, a situation that has forced domestic airlines to consider grounding operations, prompting the intervention of the Federal Government.
Looking ahead
Analysts observed that the immediate future offers little respite as the United States has maintained that the blockade will remain “until negotiations with Iran conclude one way or the other,” suggesting that the supply disruption could persist for some time.
They note that the current crisis presents both a warning and an opportunity. While the immediate outlook points to hardship for consumers, it also reinforces the urgency of achieving energy self-sufficiency.
Speaking in an interview with the BBC News hour, Pratt noted that from a refining point of view, the resurgence of domestic refining through the emergence of the Dangote Refinery, there is a net-positive advantage.
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- High Fuel Cost: Nigerians Struggle with the Ripple Effects of Middle East Tension
- Middle East Tensions: Concerns as Fuel Prices Rise in Nigeria After Oil Price Surge
The energy analyst stated that one of the short-term measures to ease fuel prices in Nigeria is for the government to offer crude oil to local refineries at a discount rate, instead of a premium.
National President of the Petrol Retail Outlet Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, while acknowledging the significance of the presence of Dangote Refinery, stated that so far, it has ensured availability, but prices remain elevated.
In an interview with TVC News, Gillis-Harry called for the establishment of more local refineries to increase domestic refining capacity and shield Nigeria from global oil price volatility, which affects the prices of petrol, diesel, Jet A1, and gas in the country.
While warning that Nigeria’s progress in slowing inflation is under threat once again with the rising cost of energy, food and transportation, CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, called on the government to adopt broader policy measures that would address structural issues in the energy, food systems, and transport infrastructure.
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in Mass Communication. He can be reached via @VICTOREZEJA on X