Global energy shock could threaten economic recovery
By Chikodi Okereocha The ongoing US–Israel–Iran conflict has disrupted global energy markets, pushing oil prices to $102.83 per barrel (Brent Crude) as of March 17, 2026, above Nigeria’s $64.85-per-barrel budget
By Chikodi Okereocha
The ongoing US–Israel–Iran conflict has disrupted global energy markets, pushing oil prices to $102.83 per barrel (Brent Crude) as of March 17, 2026, above Nigeria’s $64.85-per-barrel budget benchmark.
This, according to analysts at PricewaterhouseCoopers (PwC Nigeria), creates potential short-term fiscal upside for Nigeria, as higher oil prices could boost Nigeria’s revenues.
Partner & Clients and Market Leader, Pedro Omontuemhen, and Partner | West Africa Strategy& Leader, Olusegun Zaccheaus, however, said higher prices also translate into rising domestic energy costs, with implications for inflation, business operations, and household spending.
The multinational professional services firm made these known in its March 2026 macroeconomic briefing released yesterday.
The firm, in the latest publication titled: “How the Global Energy Shock Could Potentially Reshape Nigeria’s Economic Outlook,” said, for instance, that at current market conditions, the gross price premium amounts to roughly $55.5 million per day, or about $20.2 billion annually.
It also said the conflict has taken a toll on the gas market, with the JKM (Asian Spot) benchmark rising to $19.28/mmBtu as of March 17, 2026, up from $10.84/mmBtu at the end of February 2026.
PwC stated that at the 2026 budget exchange rate of N1,400/$, that is approximately N28.3 trillion before deductions, timing effects, and committed-volume constraints.
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However, PwC cautioned that crude-backed and refinery-linked obligations may reduce the pace and scale at which higher oil prices feed through to federation revenues.
Higher oil prices, the firm explained, also transmit rapidly into the domestic economy through fuel, logistics, and transport costs, increasing operating costs for businesses and household expenditure.
The firm warned that this cost pass-through could reignite inflationary pressures, potentially reversing the country’s recent 11-month disinflation trend, where inflation had declined to 15.06 per cent in February following recent reforms.
“The ultimate impact on Nigeria will depend on several factors, including the duration and scale of the conflict, disruptions to global oil supply and shipping routes, volatility in global commodity and financial markets, exchange rate dynamics, and the effectiveness of Nigeria’s fiscal and monetary policy response,” the publication stated.
For businesses, these developments, PwC said, create heightened cost and operating uncertainty, particularly through energy, transport, and input prices.
“Firms will therefore need to anticipate potential cost increases, review exposure across supply chains and logistics, and prepare mitigation measures to manage the financial pressures that may arise if the conflict persists,” the firm advised.
PwC warned that the 4.3 per cent Gross Domestic Product (GDP) growth it projected in January 2026 faces significant reassessment as logistics and fuel costs surge.
In its January Nigeria Economic Outlook 2026 publication, PwC highlighted Nigeria’s opportunity to turn macroeconomic stability into sustainable growth.
Key drivers of this growth, according to the firm, are resilient non-oil sectors, particularly financial services and ICT, which underpinned its projection of 4.3 per cent real GDP growth in 2026.
PwC said this outlook is reinforced by the stabilisation of the naira, easing inflation, stronger external reserves, improving oil production, and firmer non oil revenue performance.
It, however, said the US-Israel-Iran conflict is introducing additional uncertainty into global markets, which may require Nigeria to reassess elements of the outlook as the situation evolves.
The firm said Nigeria’s gross foreign reserves rose to $50.45 billion in February 2026, the highest level in 13 years (surpassing $43.61 billion recorded in 2013), noting that this increase strengthens the country’s import cover and reinforces external stability.
Similarly, the Central Bank of Nigeria reduced the Monetary Policy Rate to 26.5 per cent, signaling confidence that inflationary pressures are moderating.
Nonetheless, Nigeria, PwC said, may struggle to fully capture the upside from crude prices above $100/bbl.
According to the firm, January production remains below the 1.84m bpd budget assumption, while part of crude export proceeds is already linked to crude-backed and refinery-related obligations.
“As a result, higher prices do not fully translate into fiscal gains. Real upside depends on increasing production to generate more unencumbered barrels,” it stated.
