Middle East Tensions Put Pressure On Nigeria’s Economy Despite Oil Gains – Expert

The managing director of Legendary Foreshore, Victor Ameh, has warned that escalating tensions involving the United States, Israel and Iran could worsen Nigeria’s economic pressures, even as they create short-term revenue opportunities.

Speaking to LEADERSHIP, Ameh said the growing uncertainty in the Middle East is putting global oil markets on edge, with significant implications for Nigeria’s economic outlook in 2026.

According to him, although the conflict remains geographically distant, its ripple effects are already being felt through energy prices, foreign exchange volatility, and fiscal planning in oil-dependent economies like Nigeria.

“Oil prices have historically responded sharply to instability in the Middle East, particularly when major producers or strategic shipping routes are involved. Iran’s role as a key player in the global oil supply chain, combined with its geopolitical positioning near the Strait of Hormuz, means any escalation raises fears of supply disruptions,” Ameh said.

For Nigeria, higher oil prices could translate into increased government revenue, offering temporary relief for public finances. However, Ameh stressed that the benefits are far from straightforward.

He noted that Nigeria’s economic structure has evolved significantly in recent years. Despite being a major crude oil producer, the country still imports a large share of its refined petroleum products.

As a result, rising global crude prices often lead to higher domestic fuel costs, fueling inflation and increasing the cost of living.

In the current economic climate,marked by high inflation, currency instability and ongoing reforms, such external shocks could further complicate stabilization efforts.

Ameh added that the outlook for Nigeria’s real estate sector in 2026 reflects these mounting pressures, particularly as foreign exchange volatility remains a key concern tied closely to oil market performance.

When global oil prices fluctuate due to geopolitical tensions, the naira typically reacts, affecting import costs across sectors, including construction. Building materials, many of which are imported, become more expensive when the currency weakens, driving up construction costs and potentially stalling projects operating on tight margins.

He explained that developers are increasingly exposed to global geopolitical risks, even when operating within domestic markets.

Rising energy costs are also compounding the challenge. Higher oil prices translate into increased expenses for power generation, transportation and logistics, placing additional strain on households and businesses.

This, in turn, affects housing demand as households spend more on essentials such as fuel and electricity, their ability to afford rent or home ownership declines, tightening the real estate market, particularly in higher-priced segments.

The geopolitical uncertainty is also shaping investor sentiment. International investors often adopt a cautious stance during periods of global instability, especially in emerging markets.

This could limit capital inflows into Nigeria’s real estate and infrastructure sectors at a time when funding is already constrained.

Despite these risks, Ameh noted that there are potential upsides. Sustained high oil prices could boost Nigeria’s external reserves and government revenues, creating fiscal space for infrastructure investments that may support long-term growth in housing and logistics.

However, analysts warn that such gains depend heavily on policy discipline and efficient resource management.

Without structural reforms, temporary windfalls from higher oil prices may not translate into lasting economic benefits.

The situation highlights a broader trend shaping Nigeria’s economy in 2026, its growing exposure to global events. The real estate sector, once driven largely by domestic factors, is increasingly influenced by international conflicts, currency movements and external market shocks.

Ameh said developers, investors and policymakers must now navigate a more complex environment, where decisions made far beyond Nigeria’s borders can directly impact project costs, financing conditions and consumer behaviour at home.