Nigeria enjoys stronger buffers than previously in the face of the war in the Middle East. It benefits from its transition from a net importer to a net exporter of refined petroleum products since the start of production at the Dangote Refinery in Lekki. The transition, alongside healthy remittances from the diaspora and inflows from foreign portfolio investors, created a surplus on the overall balance of payments (BoP) of $4.6 billion in Q3 2025.
The BoP data could be much more revealing although the Central Bank of Nigeria (CBN) has started to share figures for the net trade in refined products, which is running at a quarterly deficit of about $4.0 billion. Gross foreign-exchange reserves have now crossed the $50 billion threshold for the first time. (The net figure, on which the CBN governor pledged to throw some more light after the last meeting of the monetary policy committee, is substantially lower.)
The temptation is to view the sharp increase in the crude oil price as an automatic bonus for all producers. The bonus has its limits, however. A popular tabloid opinion has marked out Russia as the winner from the US/Israeli attack on Iran for this reason. Its oil export revenues will enjoy a boost yet all sales are heavily discounted due to the imposition of sanctions and its domestic consumers cannot be permanently insulated from inflationary price movements on global markets. It is a winner in the sense that the focus of the US administration has moved further away from the war in Ukraine.
In Nigeria’s case, there are similar benefits from the crude oil price hike for the BoP and the public finances. The fiscal improvements over the past two years, however, owe more to a stronger performance in non-oil revenue collection, notably for corporate taxes. The benefits have to be set against the impact on inflation, given the Tinubu administration’s stance on subsidies.
The scale of the benefits is governed by the duration of the war. On 11 March the International Energy Agency announced the release of 400 million barrels of crude, by far the largest in its history, from global strategic reserves. Reserves in the US cover 21 days’ consumption. The figure for China, which is the largest importer of crude, is not in the public domain and estimates range up to 120 days. We may thereafter feel that the war has some way to run but should remember that there are no such strategic reserves for gas.
For oil exporters and importers alike, our take is that the greatest hit in global crises comes from shocks to the international financial system. Individual fortunes are made and multiplied by war, examples include Gulbenkian and Rockefeller, but for economies the consequences are overwhelmingly negative. Lehman Brothers was a high-profile casualty of the financial crisis in 2008. Nigeria had its own bank casualties the following year although the origins were domestic including inadequate regulation.
The linkages in the global economy have expanded so rapidly in the past 30 years that the hiding places/safe havens in the face of crises are now few in number. The Asian economies are widely seen as the source of future global growth but import roughly half their crude oil requirements through the Strait of Hormuz. Saudi Arabia and the other Gulf economies have become core export markets for OECD countries. Only incorrigible optimists will feel that we can quickly return to the status quo ante bellum. Nigeria may be located two oceans away from the conflict and has thankfully strengthened its resilience in the face of external shocks but is vulnerable to the linkages.
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