By Gabriel Ewepu
ABUJA — The Centre for Promotion of Private Enterprises (CPPE) has raised concerns over the potential impact of escalating tensions between Iran, the United States, and Israel on Nigeria’s economy, particularly in relation to crude oil exports and foreign exchange earnings.
In a statement, CPPE Chief Executive Officer Dr. Muda Yusuf highlighted that the conflict has “injected a new wave of geopolitical risk into the global economy,” with energy markets being the first affected. He emphasized the strategic importance of the Strait of Hormuz, through which roughly 20 per cent of global crude oil is transported daily.
“Any disruption to this corridor has immediate implications for global oil prices, shipping costs, insurance premiums, and supply chains,” Yusuf said. “For Nigeria, an oil-dependent economy where crude accounts for over 85 per cent of export earnings and about half of government revenue, the implications are significant.”
The CPPE noted that geopolitical tensions historically drive crude oil price increases due to fears of supply disruptions, with price volatility ranging from $5–$15 per barrel over short periods. For Nigeria, higher crude prices could boost export receipts, improve foreign exchange inflows, strengthen external reserves, and increase allocations under the Federation Account Allocation Committee (FAAC).
However, Yusuf cautioned that revenue gains are contingent on production efficiency. Nigeria’s current crude output, fluctuating between 1.4–1.6 million barrels per day, is vulnerable to theft, pipeline vandalism, and underinvestment. Without improvements, the country may not fully benefit from higher prices.
He also warned of medium-term risks: prolonged conflict could dampen global growth, reducing oil demand and causing price corrections.
Higher oil prices may support the naira by improving Nigeria’s current account balance and foreign exchange liquidity. Yet, geopolitical instability often drives investors to safe-haven assets like U.S. Treasury securities and gold, which could offset FX gains.
“The net exchange rate impact will depend on the balance between stronger oil inflows and potential capital reversals,” Yusuf added.
To mitigate risks, the CPPE recommended:
Strengthening oil production: Intensify anti-theft operations and incentivize upstream investment.
Building fiscal buffers: Channel excess revenues into stabilization and sovereign savings funds.
Accelerating refining capacity: Reduce reliance on imported refined products.
Sustaining FX market reforms: Enhance transparency and liquidity to mitigate volatility.
Targeted social protection: Cushion households against energy-driven inflation.
Economic diversification: Expand non-oil exports, manufacturing, agro-processing, ICT, and services to reduce external vulnerability.
The CPPE concluded that while rising oil prices could provide short-term fiscal relief, Nigeria’s long-term economic stability will depend on production efficiency, policy response, and the management of global capital flows.
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