Failed U.S.-Iran Talks Raise Fear of Further Fuel Price Surge in Nigeria

The failure of the United States and Iran to secure a deal during their peace talks over the weekend in Islamabad, Pakistan, has reignited tensions in the Middle East and sent shockwaves through the global energy market, raising fears of a further fuel price surge in developing nations like Nigeria.

The high-level talks in Islamabad, which ended in a stalemate, were between a U.S. delegation led by Vice President JD Vance and Iranian officials. Both parties were said to have failed to secure a deal following Iran’s refusal to accede to some of the U.S. requests, including dismantling its nuclear programme.

The stalemate, followed by the U.S. announcement of a blockade in the Strait of Hormuz, has disrupted the critical maritime route that carries roughly 20 per cent of the world’s daily oil supply, heightening fears of prolonged instability and disruption of global supply.

For weeks, markets had clung to the possibility that the dialogue might ease tensions in the Middle East and stabilize crude supply. Instead, stalled negotiations and escalating hostilities have kept the world’s most critical oil transit corridor—the Strait of Hormuz—under strain, tightening supply and pushing prices upward again.

Analysts warn that even the anticipation of failed diplomacy can move markets sharply. Oil prices, already volatile, have reacted to fears of prolonged disruption, with global benchmarks hovering near $100 per barrel as supply risks persist.

Following the collapse of the talks, WTI crude had briefly jumped over 8 per cent, breaking the $100 per barrel mark, while Brent crude rose significantly higher, trading around $102 on Monday, April 13. However, it dropped below $100 on Tuesday, April 14, following expectations of further ​dialogue between the U.S. and Iran to end the war.  U.S. President Donald Trump announced that talks with Iran could resume in Pakistan in the next two days.

According to OilPrice.com, Brent Crude stood at $95.98, while WTI sold at $92.16 per barrel on Wednesday, April 15.

Prior to the meeting held over the weekend, crude oil prices had dropped from a high of almost $120 per barrel, at the peak of the crisis, to about $95. However, the breakdown of negotiations has seemingly reversed the situation as fresh threats of disruption of shipping along the Strait of Hormuz emerge.

The International Energy Agency (IEA) has characterized the development as the “largest supply disruption in the history of the global oil market.”

Ripple Effects on Nigeria

For Nigeria, the consequences are immediate. Despite being Africa’s largest crude oil producer, the presence of the Dangote Refinery and other local refining efforts, Nigeria remains tied to global crude pricing, exposing it to global volatility.

While higher oil prices translate into increased government revenue and improved foreign exchange inflows, the price of crude in the international market, however, influences fuel prices in the country.

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As tensions escalated earlier this year, fuel prices across Nigeria surged dramatically. Retail prices for Premium Motor Spirit (PMS), also known as petrol, have seen a significant upward pressure, rising in many cities, from about ₦930 per litre, to about ₦1,400 and even more, currently, depending on the location.

That spike has already translated into higher transport fares, rising food costs, and increased pressure on household incomes.

Energy experts say the collapse of U.S.-Iran negotiations could trigger another round of increases.

Inflationary Pressure

The impact extends far beyond the fuel pump. In markets across Nigeria, traders and consumers are already grappling with the knock-on effects of rising energy costs.

Transporters pass higher fuel costs to farmers and distributors, who in turn raise food prices. The result is a chain reaction that deepens inflation and erodes purchasing power.

Global institutions are also raising the alarm. The International Monetary Fund (IMF) has warned that the Iran conflict is fueling inflation worldwide and slowing economic growth, with energy prices playing a central role.

Nigeria has recorded a consistent dip in inflation, with the rate easing to 15.1 per cent in February. However, there are concerns that the current energy crisis threatens to reverse these gains. With the Strait of Hormuz restricted, experts suggest it could take at least six months for prices to stabilize, provided a new diplomatic path is found.

An oil and gas industry analyst, Dr Ayodele Oni, called on the Nigerian government to deploy revenues earned from windfalls into programmes that would stabilise the economy and bring relief to the citizens grappling with the high cost of living crisis.

With the prices of fuel high, the World Bank had recommended increasing importation of petroleum products instead of relying only on the Dangote Refinery for domestic supply, to ease inflationary pressure. Its argument is that restoring competition would lower prices.

However, this has generated reactions from stakeholders across the oil and gas industry and the economy. While some stakeholders supported a measured import, others said efforts should be channeled towards boosting domestic refining. Groups like the Crude Oil Refiners Association (CORAN) and the Centre for the Promotion of Private Enterprise (CPPE) argue that returning to imports would undermine investments in domestic refining capacity, such as the new Dangote Refinery, and worsen pressure on Nigeria’s foreign exchange. Instead, they advocate a local pricing model and for the government to use excess crude revenue to subsidize crude supply to local refineries

CPPE CEO, Dr Muda Yusuf, who appeared on Arise News on Tuesday, stated that if there are proven cases of acute shortage of refined petroleum products to meet local demands, the authorities could create a window for importation, but warned that such a move is unnecessary when domestic refiners like Dangote have the capacity to supply what the local market currently needs.

“We have this capacity in Dangote Refinery and some other modular refineries. The issue as we speak today is not about capacity,” Dr Yusuf stated. “The issue is about the global crude price and the fact that the domestic refinery is fully exposed to the volatility in the global crude oil market,” he added.

He urged the government to focus on policies that encourage domestic production and generally boost the drive to ensure energy security.