Crude Oil Surge to $100 Threatens Fresh Inflation Wave as Fuel, Transport Costs Rise

Nigeria faces renewed inflationary pressure as global crude oil prices climb above $100 per barrel following escalating tensions between the United States and Iran, raising concerns over possible increases in petrol prices, transport fares and the cost of essential goods.

The surge, however, presents a financial boost for the Federal Government, with Nigeria expected to benefit from higher oil earnings outside its budget projections.

Nigeria’s Bonny Light crude recently traded above the $100 per barrel mark for the first time since May, driven by fears that the Middle East conflict could disrupt global oil supplies. The region accounts for a significant share of the world’s crude exports, and prolonged instability could keep prices elevated.

Although the higher oil prices could improve government revenues, economists warn that the gains may be offset by rising living costs, especially under Nigeria’s deregulated downstream petroleum market, where pump prices respond to movements in global crude prices.

The 2026 Federal Government budget was based on a crude oil benchmark of $64.85 per barrel, daily production of 1.84 million barrels and an exchange rate assumption of N1,400 to the dollar.

At current market levels, Nigeria could earn about $35 more per barrel than projected, potentially translating into substantial additional revenue if production volumes and exports remain steady.

However, the expected windfall could be limited by production challenges. Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicates that Nigeria’s current oil output is around 1.7 million barrels per day, including condensate, below the budget benchmark.

For households and businesses, the immediate concern is the likely impact on petrol prices. Rising international crude prices increase the cost of fuel imports and may push marketers to adjust pump prices upward.

Any increase in petrol prices is expected to trigger higher transport fares and increase the cost of moving goods, with likely consequences for food prices, manufacturing costs and general household expenses.

Managing Director of Petroleumprice.ng, Jeremiah Olatide, said the downstream petroleum market had become increasingly unpredictable due to global oil market pressures.

“With the resumption of loading by Dangote Petroleum Refinery in naira at N1,215 per litre on Wednesday, we expected fuel importers to reduce prices, and some actually did. However, the sudden spike in crude oil prices due to the Middle East crisis has disrupted that trend. We should expect more price instability in the coming weeks,” he said.

Similarly, National President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), Mazi Colman Obasi, said the full impact of the crude price increase may soon filter through the domestic market.

“The implications will be far-reaching for households, businesses and the wider economy once operators across the value chain adjust their prices,” he warned.

Before the latest crude oil rally, data from Petroleumprice.ng showed that some depots in Lagos, Warri and Calabar had reduced loading prices in a bid to attract customers, while prices in Port Harcourt remained relatively stable.

Currently, petrol prices at filling stations in Lagos and surrounding areas range between N1,300 and N1,400 per litre, depending on location.

Analysts say the direction of global oil prices in the coming weeks will determine whether Nigeria experiences a temporary shock or a prolonged increase in fuel and consumer prices.