Middle East Tensions May Deliver N30trn Oil Windfall To Nigeria – NESG

Nigeria could reap as much as N30 trillion in additional oil revenue if if the ongoing conflict in the Middle East push global crude prices to circa $130 per barrel, according to a new policy brief by the Nigerian Economic Summit Group (NESG).

The think-tank said the development could hand the administration of Bola Tinubu its largest fiscal windfall in years, but warned that it could also pose significant political and policy risks as the country approaches the 2027 general elections.

In its report titled “Boom, Not Gloom,” the NESG said the escalating tensions involving the United States, Israel and Iran present a “time-limited opportunity” for Nigeria to strengthen its fiscal position, provided it avoids the spending excesses that characterised previous oil booms.

“Fiscal windfalls could range from N2.3 trillion under a short-lived crisis to N30.2 trillion under a protracted scenario,” the group said.

The group noted that Brent crude oil currently trades at about $99.80 per barrel, significantly above Nigeria’s 2026 budget benchmark of $64.9 per barrel. The price gap, it said, offers a potential revenue boost that could help finance the country’s more than N25 trillion fiscal deficit.

NESG, projecting three possible price paths said crude could average about $90 per barrel under a contained disruption; $110 if the conflict spreads across the Gulf region; and $130 in the event of a prolonged global shock.

Under the most extreme scenario, NESG said the federal government’s share of the windfall could be sufficient to cover annual debt-service obligations or fund roughly 60 per cent of the capital budget.

However, the NESG cautioned that the gains are far from guaranteed. Nigeria’s oil output has averaged about 1.48 million barrels per day this year, well below the 1.84 million barrels per day projected in the national budget. If production fails to improve, the group warned that the projected gains could shrink by about 20 per cent.

Beyond production challenges, the report identified the approaching 2027 elections as a key domestic risk. “The January 2027 election cycle is the key domestic risk,” the NESG said, warning that political pressure to ramp up spending or revive petrol subsidies could undermine recent economic reforms.

The NESG therefore urged the government to “firmly resist any pressure to reintroduce fuel subsidies,” arguing that doing so during an oil rally could recreate distortions that historically eroded the benefits of higher crude prices.

The group further warned that rising oil prices could still filter into domestic costs. According to its estimates, the shock could add between 1.3 and 5.2 percentage points to inflation over the coming quarters, depending on how long crude prices remain elevated