By Olumide Johnson
The federal government has begun reviewing economic policies as geopolitical tensions in the Middle East threaten to transmit new shocks to Nigeria through energy markets, capital flows and global supply chains.
In a statement issued by the Federal Ministry of Finance, Uloma Amadi, Assistant Director of Information and Public Relations, confirmed that the Economic Management Team had commenced an assessment of the potential economic consequences of the escalating conflict involving the United States, Israel and Iran.
The Economic Management Team is chaired by Wale Edun, Minister of Finance and Coordinating Minister of the Economy.
Edun also presided over a Naira-for-Crude policy coordination meeting, where officials reviewed developments in global energy markets and their potential domestic implications.
“The federal government will continue to monitor the situation closely and adjust policy measures where necessary to minimise disruptions, sustain investor confidence and protect the welfare of Nigerians,” the statement said.
DECISION HIGHLIGHT
The Federal Government has signalled readiness to recalibrate economic policies should the conflict intensify and disrupt global energy markets.
Officials identified three transmission channels through which the crisis could affect Nigeria’s economy: volatility in oil and gas prices, shifts in global capital flows and disruptions in international supply chains.
These channels could increase domestic fuel costs, weaken investor inflows and push up inflation if the conflict persists.
DECISION MEMO
Nigeria’s economic managers are confronting a familiar dilemma: how to protect a fragile macroeconomic environment from external shocks triggered by global geopolitical tensions.
The conflict in the Middle East has intensified fears of disruptions along major energy transit routes, particularly the Strait of Hormuz, through which a significant portion of global crude oil exports flows.
Global markets have already responded with heightened volatility in energy prices and financial markets.
For Nigeria, the consequences are complex.
On one hand, rising global oil prices can increase export revenues for an oil-producing country. On the other hand, higher energy prices also transmit inflationary pressures across the domestic economy, particularly through higher fuel costs and transport expenses.
Edun warned that volatility in global energy markets is already affecting domestic prices.
“Volatility in global energy markets is already driving increases in domestic prices including fuel, diesel, cooking gas and fertiliser,” the ministry said.
The first and most immediate transmission channel is the energy market itself.
Nigeria remains heavily exposed to fluctuations in global crude oil prices. Rising energy costs increase the price of refined petroleum products, logistics services and agricultural inputs, creating ripple effects across the economy.
The second channel relates to capital markets.
Heightened geopolitical tensions often trigger a flight to safety among global investors, with capital moving away from emerging markets into advanced economies or safe-haven assets.
Such movements could reduce investment inflows into Nigeria, weaken financial markets and exert pressure on the exchange rate.
The third channel involves global trade logistics.
Disruptions along major shipping routes or energy supply corridors can raise freight costs and lengthen delivery times, thereby increasing the cost of imported goods and industrial inputs.
For an import-dependent economy such as Nigeria, this transmission channel can quickly translate into higher domestic prices.
Officials warned that a prolonged conflict could amplify these pressures.
If elevated energy prices persist, inflationary risks could intensify while the cost of living continues to rise.
The warning comes as petrol prices in several parts of Nigeria have already climbed to about ₦1,300 per litre, prompting businesses to prepare for rising operational expenses.
Organised private sector groups and economists have cautioned that sustained energy price increases could cascade through production costs and consumer prices.
Despite these risks, the government argues that Nigeria enters the current period of global uncertainty with improved macroeconomic conditions.
Economic data cited by the ministry indicate that real Gross Domestic Product growth reached 4.07 percent in the fourth quarter of 2025, one of the strongest quarterly performances recorded in more than a decade.
Officials attribute this performance to ongoing economic reforms and improved macroeconomic coordination.
Nevertheless, the government acknowledged that the trajectory of the conflict will ultimately determine the scale of the economic impact.
Policy makers are therefore closely monitoring key indicators including crude oil prices, exchange rate movements, capital flow trends and financial market conditions.
The Economic Management Team is expected to continue reviewing policy responses aimed at preserving macroeconomic stability while mitigating the effects of external shocks.
DATA BOX
Economic Policy Review: Ongoing
Coordinating Body: Economic Management Team
Chair: Wale Edun
Key Monitoring Indicators:
Global crude oil prices
Exchange rate movements
Capital flow trends
Financial market conditions
Domestic inflation
Real Gross Domestic Product Growth (Q4 2025): 4.07%
Petrol Price in Nigeria: Approximately ₦1,300 per litre
Major Global Risk Point: Strait of Hormuz energy transit corridor
Primary Transmission Channels:
Energy price volatility
Capital flow shifts
Supply chain disruptions
WHO WINS / WHO LOSES
Winners
Oil exporters could benefit from higher global crude prices if supply disruptions occur.
Domestic producers may experience temporary revenue gains from stronger export earnings.
Losers
Consumers face rising energy costs and higher living expenses.
Businesses dependent on imported inputs and logistics may encounter higher operational costs.
Financial markets could experience reduced capital inflows amid global risk aversion.
POLICY SIGNALS
The Federal Government is signalling a readiness to adopt flexible macroeconomic responses to external shocks.
The policy stance suggests continued reliance on active monitoring and calibrated adjustments rather than abrupt economic interventions.
It also reflects the recognition that Nigeria remains vulnerable to geopolitical developments in global energy markets.
INVESTOR SIGNAL
Investors are likely to interpret the government’s stance as an attempt to preserve macroeconomic stability amid global uncertainty.
However, continued exposure to oil market volatility means that investor sentiment will remain closely tied to global energy price movements and geopolitical developments.
RISK RADAR
Three risks stand out.
First is energy price volatility, which could transmit inflationary pressures across the domestic economy.
Second is capital flow risk, as global investors may reduce exposure to emerging markets during periods of geopolitical uncertainty.
Third is supply chain disruption, where rising freight costs and logistics delays could amplify domestic price pressures.
The federal government’s policy review therefore reflects an emerging recognition that external geopolitical shocks remain a persistent structural risk to Nigeria’s economic stability.
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