By Babade Victor Temijope
The ongoing conflict involving Iran, the United States, and Israel has triggered ripple effects across the global economy. What began as a geopolitical confrontation in the Middle East has quickly evolved into an energy crisis with consequences felt far beyond the region. For millions of Nigerians, the impact is most visible at filling stations where fuel prices have continued to rise. The crisis illustrates how international conflicts can shape local economic realities, linking events in the strategic Strait of Hormuz with the daily cost of transportation and living in Nigeria.
To fully understand this article, here is why the Strait of Hormuz is important, it is considered one of the most strategically important oil transit routes in the world because a large portion of the world’s oil passes through it. About 20% of the world’s oil supply moves through this strait, also major oil producing countries like Saudi Arabia, Iran, Iraq, Kuwait, and the United Arab Emirates ship their oil through this route, likewise thousands of oil tankers pass through the strait every year to supply global markets. Whenever tensions rise involving Iran, there are fears that the Strait of Hormuz could be blocked attacked, which could lead to, disruption of oil shipments, global oil prices may rise sharply, and also countries like Nigeria may experience higher fuel prices because the global oil market becomes unstable.
The Strait of Hormuz is like the main highway for global oil transportation. If conflict affects that route, it can increase oil prices worldwide, which eventually leads to higher petrol prices in many countries, including Nigeria. For Nigeria, this has a mixed impact. On one hand, higher oil prices can increase Nigeria’s export revenue, foreign exchange earnings, and government income, because oil accounts for large portion of Nigeria’s exports. In other word the Iran conflict has brought about rise in global oil prices across the world and also brought about tension in the Middle East. The rise in global oil prices has affected Nigeria drastically, because whenever there is rise in global oil prices, it leads to increase in fuel prices and cost of living.
Secondly, apart from the rise in global oil prices, increase in fuel prices and cost of living is one of the reasons why the Iran conflict has affected Nigeria, although Nigeria exports crude oil, it still relies heavily on imported refined petroleum products such as petrol, diesel, and aviation fuel. When global oil prices rise due to the Iran conflict, the cost of importing these fuels also increases. As a result, fuel prices at Nigerian filling stations rise, which leads to higher transportation costs and general inflation. This situation worsens the cost-of-living crisis, making goods and services more expensive for ordinary Nigerians.
The Iran conflict has also put pressure on the Nigerian economy and inflation, the conflict can also cause economic instability in Nigeria. Rising fuel prices increase production costs for industries such as transportation, manufacturing, and agriculture. Let’s take for example, businesses spend more on diesel and logistics, food prices may rise due to higher transportation costs, in the sense that once there is increase in fuel price, transportation becomes very expensive and also the prices of food skyrocket, all this because of the increase in fuel price. Also, inflation increases across the economy, global experts have warned that disruptions linked to the Iran conflict could increase food prices and living costs worldwide, including in countries like Nigeria, this source stated by “The Times of India”.
Whenever tensions rise between Iran, the United States, or Israel, traders expect oil supply shortages and begin buying oil aggressively. This speculation pushes prices up. For instance, the recent escalation of the Iran conflict pushed crude oil prices above $80-$100 per barrel, the highest level in months. Since Nigeria’s downstream petroleum sector is linked to the international oil market, the rise in crude prices automatically increases the cost of producing and selling petrol locally. The global price increase caused by the Iran conflict has already forced Nigeria refiners and marketers to adjust prices. For example, the Dangote Refinery raised it ex-depot petrol price by about ₦ 100 per liter, pushing pump prices close to ₦970-₦1,175 per liter in several cities, “The Cable”.
The Iran conflict has also made shipping through the Middle East more dangerous. Tankers moving through the Strait of Hormuz now face higher insurance costs and security risk, increasing the cost of transporting crude oil and refined fuel. These additional costs are factored into fuel pricing, making petrol, diesel, and cooking gas more expensive in Nigeria. As petrol prices rise due to the conflict, the effect spreads through the Nigerian economy. Transport fares have already increased sharply in some cities because petrol prices have crossed ₦1,000 per liter in certain areas, forcing commercial drivers to charge higher fares, this as lead to higher transport cost, increased in food prices, rising cost of goods and services, and overall inflation and cost-of-living pressure on Nigerians, “The Guardian”.
The conflict involving Iran affects Nigeria because disruptions in the Strait of Hormuz increase global oil prices, raise refinery and depot costs, increase shipping expenses, and ultimately push petrol prices higher in Nigerian filling stations. One of the most significant links between the Iran conflict and fuel prices in Nigeria lies in the strategic importance of the Strait of Hormuz, a narrow but crucial maritime passage through which a large portion of world’s oil supply is transported. Because this waterway connects major oil producing countries in the Persian Gulf to international markets, any conflict or instability in the region quickly affects global energy market.
Babade Victor Temijope, is currently serving as a corps member at the Institute for Peace and Conflict Resolution (IPCR), Abuja. and can be reached, via: babadevictor107@gmail.com.
