Crude is climbing fast and nerves are climbing faster. On July 23, Brent traded at $98.47 per barrel and WTI hit $90.11, after a 4.68% jump. The trigger was not economics but geopolitics: a collapse of the US-Iran ceasefire, renewed fighting, Iran’s continued closure of the Strait of Hormuz, and new Houthi missile and drone attacks on Saudi oil tankers in the Red Sea. Two of the world’s most critical oil chokepoints are now under threat at the same time, and shipping companies are already rerouting vessels. That is why markets are pricing in $100 oil again.
For Nigeria, this is a complicated moment. On paper, higher oil prices should be good news. We are an oil exporter, so every dollar above budget helps government revenue, external reserves, and the naira. But the immediate transmission into the domestic economy is not that clean. The same price surge that boosts FAAC inflows also raises the cost of importing refined fuel, diesel, fertiliser, and anything that moves on trucks. Nigeria still imports a large share of its refined products, and logistics costs are tightly linked to global diesel and shipping rates. When tankers are diverted from the Red Sea and insurance premiums rise, those costs land in Lagos, Kano, and Port Harcourt within weeks.
We are already seeing the pressure build. Headline inflation eased only marginally to 15.91% in June 2026, and food inflation actually accelerated to 3.75% from 2.98% in May. Food is the biggest part of the inflation basket, and it is highly sensitive to transport and input costs. If oil stays near $100, the cost of moving farm produce, running generators, and importing inputs will likely push food prices higher again, undoing some of the modest gains we saw earlier this year.
Policymakers are responding with caution. The Central Bank of Nigeria kept the Monetary Policy Rate at 26.5% this week after its 306th MPC meeting. Governor Olayemi Cardoso was explicit: global uncertainties have heightened because of the renewed hostilities in the Middle East, and maintaining a tight stance is appropriate to protect gains on inflation, stabilise the FX market, and guard macroeconomic stability. In plain terms, the CBN is choosing not to ease, because cheaper money now could fuel more inflation if imported energy costs keep rising.
The broader implication is that Nigeria’s inflation story is no longer fully in our control. Even with better FX management and some domestic production improvements, an external shock like this can quickly feed into transport fares, food prices, and manufacturing costs. For households, that means the relief from a slight dip in headline inflation may be short-lived. For businesses, it means budgeting for higher logistics and energy expenses even as oil revenues look stronger on the government side.
The market is essentially testing two things at once: whether supply disruptions in Hormuz and Bab el-Mandeb persist, and whether central banks globally will have to stay tight for longer because of energy-driven inflation. For Nigeria, the balance is delicate. Oil at $100 helps the fiscal position, but if it comes with higher food and transport inflation, the net effect for the average person could be negative. The next few weeks will depend on how long the shipping routes remain risky and how much of the oil price spike is passed through locally. Until then, expect tighter monetary policy to stay, and expect prices at the market to remain under pressure.
