Dare Babalola
Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has warned that the country’s economy is under significant pressure as global tensions stemming from the Middle East crisis continue to ripple across markets.
Speaking during the Islamic Development Bank (IsDB) Group Day in Lagos, Edun said the situation has introduced a new layer of economic stress at a time when Nigeria is already undergoing major reforms aimed at stabilising the economy and reducing poverty.
According to a statement issued on Monday by his Special Adviser on Media and Communications, Dr. Ogho Okiti, the current shock is closely tied to geopolitical developments that have disrupted global energy supply chains and intensified inflationary pressures worldwide.
The crisis, which has escalated following heightened tensions involving the United States and Iran, has significantly affected crude oil markets. Key shipping routes, particularly the Strait of Hormuz, have faced disruptions, pushing oil prices sharply upward. Nigeria’s Bonny Light crude, for instance, surged from about $70 per barrel to well above $110 at peak levels.
Edun noted that while higher oil prices could boost Nigeria’s foreign exchange earnings and government revenues as an oil-producing nation, the broader economic consequences remain severe. He explained that the shock is compounding existing challenges such as rising fuel costs, food inflation, and pressure on households and businesses.
“The shock comes at a critical period of economic transition and adds to inflationary pressures, increasing the cost of living and placing additional strain on Nigerians,” he said.
He identified three major channels through which the crisis is impacting the Nigerian economy. First is the surge in domestic energy prices, with petrol rising by over 50 percent and diesel climbing by more than 70 percent in recent weeks. These increases are already affecting transportation, production costs, and overall living standards.
Secondly, Edun highlighted the risk to capital inflows, noting that global uncertainty often drives investors toward safer markets, potentially reducing investment into emerging economies like Nigeria and tightening financial conditions.
Thirdly, disruptions in global logistics and supply chains are expected to push up shipping and import costs, further fueling inflation domestically.
Meanwhile, the International Monetary Fund (IMF) has warned of broader global implications. Ahead of its 2026 Spring Meetings in Washington, the Fund projected that as much as $50 billion in emergency financing may be required to support countries facing balance-of-payments challenges due to the crisis. IMF Managing Director Kristalina Georgieva also indicated that global growth forecasts could be downgraded due to rising energy costs and supply disruptions.
Despite the headwinds, Edun maintained that Nigeria is in a stronger position to withstand the shock compared to previous crises such as the COVID-19 pandemic and the Russia-Ukraine war. He attributed this to ongoing macroeconomic reforms implemented since May 2023.
He pointed to improved oil production levels, currently at about 1.86 million barrels per day, as well as policy measures like the naira-for-crude initiative aimed at stabilising domestic fuel supply. The government is also sustaining a liberalised foreign exchange regime to support capital flows and has introduced tariff adjustments to boost industrial production and trade.
“These measures reflect a deliberate strategy focused on stabilisation, resilience, and sustaining growth,” Edun said.
Looking ahead, he emphasised that the government remains committed to strengthening macroeconomic stability, attracting investments, and promoting inclusive growth. He added that future priorities will include expanding private sector participation, deepening domestic capital markets, creating jobs, and leveraging opportunities under the African Continental Free Trade Area (AfCFTA).
While acknowledging that Nigeria is not immune to global shocks, Edun expressed confidence that ongoing reforms have positioned the country to better navigate the current economic turbulence.
