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The hostilities in the Gulf Region have delivered a classic terms-of-trade shock to Nigeria. Brent crude was trading at about $73 per barrel on the eve of the conflict.

It moved above $84 within days, climbed into the low 90s by the end of the week, and on Monday, 9 March, surged above $117, briefly touching about $119.50 intraday.

Shipping through the Strait of Hormuz, which normally carries about one-fifth of global oil and gas flows, has been severely disrupted.

Attacks on major energy infrastructure in Saudi Arabia and Qatar have forced QatarEnergy to declare force majeure on liquefied natural gas (LNG) exports. JPMorgan has warned that Brent could reach $120 if disruption persists.

For Nigeria, which exports crude but is not yet self-sufficient in refined petroleum products, the transmission channels of this shock run in opposite directions.

The same event that lifts export earnings also drives up domestic fuel costs and inflationary pressure across the wider economy.

There is an unmistakable sense of deja vu about this moment. The oil shocks of 1973, 1979, and 1990, and the 2007 to 2008 commodity boom, all produced fiscal windfalls for Nigeria.

Yet none translated into durable buffers or deep structural reform.

Windfalls were largely spent rather than saved, and when prices eventually fell, the country was left exposed.

That history should shape today’s response. Higher oil prices will help Nigeria in the short term. The real question is whether the country will finally use a temporary gain to reduce a permanent vulnerability.

Nigeria’s 2026 federal budget is benchmarked at $64.85 per barrel, with a crude production assumption of 1.84 million barrels per day. With Brent now well above that benchmark, the fiscal effect is clearly positive.

Even after allowing for production costs, royalties and joint venture obligations, the directional benefit to Federation Account Allocation Committee (FAAC) allocations, federal account balances and foreign exchange inflows is real.

CardinalStone Research has projected revenue growth of between 12.5 per cent and 57.2 per cent for Nigerian oil producers if average prices range from $70 to $100 per barrel across 2026.

Nigerian crude grades, including Bonny Light, are priced off Brent, so a disruption thousands of miles away still lifts the reference price on every barrel Nigeria sells.

That said, the gain should not be overstated. Higher prices help, but Nigeria does not automatically capture the full gross uplift as fiscal revenue, especially if production remains below official targets.

The net gain is real but narrower than the headline price movement suggests.

The pass-through to domestic retail prices has been rapid. Dangote Petroleum Refinery raised its ex-depot gantry price for Premium Motor Spirit (PMS) from N774 to N874 per litre on 2 March.

By 8 March, the gantry price had risen again to N995 per litre. Nigerian National Petroleum Company Limited (NNPC) retail outlets in Abuja moved to around N960 per litre, while pump prices at some stations moved above N1,000 per litre.

In a deregulated market, refiners and importers price on replacement cost and import parity, not on the historical cost of old inventory. That explains part of the speed of the adjustment.

Even so, the concentration of supply in a small number of hands means the authorities cannot be indifferent to questions of market power.