US–Israel–Iran and Nigeria’s Cost of Living

If you have filled your car tank recently, or have seen the conversations about the hike in fuel prices on the internet lately, you already know that something has changed. Petrol prices across Nigeria have surged to nearly N1,400 per litre, transport fares are increasing and the prices of everyday goods are rising. Economists warn that the escalation of tensions between the United States, Israel, and Iran could push these prices even higher, and thereby worsen Nigeria’s already high cost of living crisis.

Israel and the US launched missile strikes on Iran on Saturday, March 1st, only two days after both countries held indirect talks about Tehran’s nuclear program. Since then, the war has continued to raise fear in countries that are directly or indirectly affected by the war. Experts say the consequences of this escalation could extend far beyond the Middle East, with ripple effects reaching countries including Nigeria.

There are at least four major ways  this could affect Nigeria. Air travel is already being disrupted, with several international flights cancelled, postponed, or rerouted over the Middle East due to safety concerns. Security analysts in Nigeria have also warned of domestic security risks as the Islamic Movement of Nigeria (IMN), a pro-Iranian Shia group led by Sheikh Ibrahim El-Zakzaky, held protests in Abuja and Kaduna to express their solidarity with Iran. The conflict is also disrupting the global oil markets which is affecting Nigeria’s oil revenue and fuel prices today.

Rising Oil Prices and the Global Energy Shock

The tension is already affecting global energy markets. Brent crude rose by 10 per cent, reaching about $101.59 per barrel as traders react to the risk in the current market.  The Strait of Hormuz, which is a major route for global oil shipments across the world, is currently inaccessible to oil tankers. Every day, about 20 million barrels of crude oil and fuel pass through this narrow waterway between Iran and the Arabian Peninsula. The Strait is crucial for oil exports from Saudi Arabia, Iraq, Kuwait, Qatar, and Iran. Any disruption, or even the fear of one, causes oil prices and shipping insurance costs to spike, affecting prices of end products and services.

Some major oil and trading companies like Maersk, Hapag-Lloyd, and CMA CGM have reportedly paused shipments through the Strait of Hormuz. An executive at a major trading desk told the international news platform Reuters, “Our ships will stay put for several days.”

Although Saudi Arabia and the United Arab Emirates have alternative pipelines, experts say these routes cannot handle the full volume of oil that usually goes through the Strait. History shows how sensitive oil prices are to conflicts in the Middle East. During the 1990–1991 Gulf War, Brent crude prices doubled from about $15 per barrel in July 1990 to over $40 by October after Iraq invaded Kuwait. In contrast, during the 2003 Iraq War, oil prices rose slightly before the war but stabilised when supply fears eased.

Nigeria, despite being Africa’s largest oil producer, still depends on imports of refined petroleum products. This means that when global crude prices go up, the cost of refining and importing petrol also rises in Nigeria.

The Dangote Refinery, which Nigerians hoped would reduce the country’s vulnerability to global price fluctuations, is not immune from these pressures. In 2025, the refinery  reportedly imported between 9 and 10 million barrels of crude oil per month due to supply shortages in Nigeria. When the crude it needs gets more expensive because of global wars or tensions, the cost of fuel it refines will also follow suit. The refineries pass these higher costs to fuel marketers and distributors, who then adjust the pump prices across the country as we can already witness across the country. The chain reaction begins in a refinery and doesn’t end at your local filling station,  subsequently, the prices of  goods or services that require  fuel will also increase.

Although the Federal Government’s Economic Management Team (EMT) has launched a review of the situation to see how best to minimise the negative effects of the crisis on Nigerians and the country, there has been no meaningful government response addressing the possibility of price stabilisation mechanisms and policy interventions to cushion Nigerians from the impact.

This is particularly upsetting because the condition on which fuel subsidy was removed in 2023 was that the billions saved from subsidy payments would instead go into infrastructure, welfare, and economic reliefs.