Market News

…Misses gains from Iran war price surge

….Seeks urgent reforms to boost production, shield economy

By Elizabeth Williams & Faith Adeyefa

Nigeria may have forfeited an estimated N28.3 trillion in potential annual revenue due to its inability to fully exploit the recent surge in global oil prices triggered by the ongoing Iran war, Chairman of the Alliance for Economic Research and Ethics, Dele Oye, has said.

Oye, who is also the immediate past Chairman of the Organised Private Sector of Nigeria, lamented that despite crude oil prices climbing above $100 per barrel, the country failed to translate the boom into fiscal gains due to production shortfalls and structural inefficiencies.

His words: “When the Iran war sent oil prices soaring past $100 per barrel, many nations rushed to harvest the windfall. But Nigeria, the giant of Africa, found itself like the proverbial goat standing in front of palm leaves yet chewing stones. The paradox is painful: oil is expensive, but our pockets remain empty.

“On paper, Nigeria should be smiling to the bank. Brent crude now trades at $102–$114 per barrel, far above our budget benchmark of $64.85. That’s a premium of $37–$49 per barrel, translating to a theoretical N28.3 trillion annual windfall. But reality bites harder than arithmetic.”

Production gap, subsidy drain undermine gains

Highlighting Nigeria’s weak output performance, Oye said the country continues to fall significantly below its production target, thereby limiting its ability to benefit from high prices.

“We pump 1.46 million barrels per day instead of the 1.84 million target. That’s 380,000 barrels missing daily like ‘cooking soup without meat.’

“Much of our crude is already pledged to creditors and refineries. During the Russia-Ukraine war, oil hit $110 for six months, yet Nigeria captured little. Why? Low production and subsidy drains. Our ‘extra’ revenue is largely a mirage. Even NNPC’s promise to add 100,000 barrels is a ‘drop in the ocean’ compared to the 360,000+ bpd gap.”

Missed opportunities for economic relief

Oye noted that even a fraction of the potential windfall could have been deployed to address critical sectors of the economy.

He listed areas such as “Strategic petroleum reserves (we currently have none). Fertilizer subsidies before April planting season. CNG conversion kits to reduce petrol dependence. Targeted social transfers to shield vulnerable households. Refinery rehabilitation and modular refinery investments.”

“But as elders say, ‘A child who cannot hold a cup should not be given a calabash.’ Without fixing production, these dreams remain ‘castles in the air,’” he added.

Way forward: structural reforms, discipline

Proffering solutions, Oye urged the Federal Government to focus on long-term resilience rather than short-term fixes.

“Nigeria must resist the temptation of quick fixes and instead build resilience: Sell crude to local refineries in naira to ease forex pressure. Release any strategic reserves to stabilize supply. Digitally distribute fertilizers to farmers before planting season. Introduce flexible fuel taxes that shrink when global prices surge. Scale up CNG adoption and LPG household conversion. Secure oil assets to close the 380,000 bpd production gap. Ring-fence windfalls into the Sovereign Wealth Fund and Excess Crude Account.

“States should subsidize public transport, not fuel. Let households cook with LPG, not petrol.”

He cautioned against over-reliance on high oil prices, warning: “Above all, avoid the subsidy trap and resist adjusting budgets to assume $100 oil is permanent. As the elders say, ‘The rain does not fall forever; the sun must shine again.’”

Nigeria at crossroads

Oye stressed that the current situation presents both a warning and an opportunity for Nigeria to reset its economic strategy.

“Nigeria stands at a crossroads. The Iran war has opened a window of opportunity, but without production discipline, we risk watching billions slip through our fingers. Oil booms are fleeting.

“The real test is whether Nigeria can finally build an economy that thrives not because oil is expensive, but because its foundations are strong enough to withstand both boom and gloom. As one editorial wisely put it: ‘A nation that eats its seed yam during planting season will starve at harvest.’ Nigeria must choose wisely.”