Nigeria could see short-term gains from surging global oil prices, but heightened geopolitical tensions and policy uncertainty may temper the upside, according to Lukman Otunuga, Head of Market Research at FXTM.
In a statement on Tuesday, Otunuga said oil benchmarks are “heading for their best monthly gain since 1990,” driven by fears of supply disruptions as the Strait of Hormuz remains effectively closed.
“Given the ongoing conflict, oil prices remain fundamentally bullish with $100 a key psychological level for both Brent and Crude,” he noted.
He explained that higher crude prices are positive for Nigeria as a net oil exporter, adding that “higher oil prices should translate to currency gains, although global risk aversion linked to the Iran conflict “may offset some upside.”
Markets have been rattled by conflicting signals from the United States over the Iran war, now in its fifth week.
While tensions escalated after Iran accused Washington of preparing for a land assault, sentiment briefly improved after reports that former President Donald Trump was open to ending the conflict.
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Otunuga warned that “repeated mixed messages… and ongoing closure of the Strait of Hormuz could lead to more volatility as investors scramble to price the uncertainty.”
Beyond geopolitics, attention is turning to the United States labour market, with the March nonfarm payrolls (NFP) report expected to provide fresh direction.
“The outcome could shape expectations around the Fed at a time when surging energy prices are already complicating the outlook,” he said.
According to him, economists expect 65,000 jobs to have been added in March, compared with a contraction of 92,000 in the previous month, stressing that gold has come under pressure despite global uncertainty.
Otunuga noted that the metal has “shed almost 14% this month,” weighed down by a stronger dollar and fading expectations of lower US interest rates.
In currency markets, the Japanese yen faces renewed scrutiny after the USD/JPY pair crossed the 160 level for the first time since July 2024.
Otunuga cautioned that any intervention by Japanese authorities—who previously defended that level—“could trigger an aggressive selloff.”
He added that the Iran conflict and oil price swings may further influence demand for safe-haven assets.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
