The Nigerian Economic Summit Group has warned the Federal Government against reintroducing petrol subsidies even as rising geopolitical tensions in the Middle East could push crude oil prices higher and deliver as much as N30trn in additional revenue to Nigeria.
In a report titled “Boom, Not Gloom,” the economic think tank said escalating tensions involving the United States, Israel and Iran could trigger a surge in global oil prices, presenting what it described as a “time-limited opportunity” for Africa’s largest crude producer to strengthen its fiscal position, provided policymakers maintain discipline and avoid policy reversals.
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According to the group, Nigeria’s potential fiscal gains from higher crude prices could range from about N2.3trn in a short-lived disruption to roughly N30.2trn under a prolonged global supply shock.
The projections are based on three oil price scenarios. The report assumes crude could average around $90 per barrel if the disruption remains contained, rise to about $110 per barrel if tensions spread across the Gulf region, and climb as high as $130 per barrel under a prolonged geopolitical crisis affecting global energy markets.
Under the most extreme scenario, the federal government’s share of the windfall could be large enough to cover Nigeria’s annual debt-service obligations or finance nearly 60 per cent of the country’s capital expenditure, significantly easing fiscal pressures.
However, the NESG cautioned that Nigeria may not fully realise the potential gains if crude production remains below budget projections.
The country’s oil output has averaged about 1.48 million barrels per day this year, considerably lower than the 1.84 million barrels per day benchmark used in the federal budget.
If production does not improve, the think tank warned that the expected revenue gains from higher oil prices could be reduced by roughly 20 per cent.
Beyond production challenges, the NESG identified domestic political pressures, particularly ahead of the January 2027 election cycle, as a major risk to prudent management of the potential windfall.
“The January 2027 election cycle is the key domestic risk,” the report stated, warning that pressure to increase public spending or reinstate fuel subsidies could undermine recent economic reforms.
The NESG warned that restoring the subsidy during a period of elevated oil prices would recreate the fiscal distortions that previously wiped out much of the benefit from oil booms.
The group therefore urged policymakers to firmly resist pressure to reintroduce the subsidy, noting that maintaining reform momentum would be critical to converting higher oil prices into lasting economic benefits.
Despite the potential revenue boost, the think tank said rising crude prices could still generate inflationary pressures within the domestic economy.
It estimated that higher oil prices could add between 1.3 and 5.2 percentage points to Nigeria’s inflation rate in the coming quarters, depending on the duration and intensity of the oil market shock.
This could pose a challenge to the country’s recent progress in easing inflation. Nigeria’s headline inflation rate declined to 15.1 per cent in January 2026, down from nearly 30 per cent recorded a year earlier, following months of monetary tightening and fiscal reforms.
To maximise the benefits of the potential windfall, the NESG advised the government to adopt a disciplined policy approach centred on saving excess oil revenues, maintaining monetary stability, and strengthening policy communication.
The think tank recommended that any oil revenue earned above the budget benchmark should be saved or used to reduce public debt, while authorities should also work to sterilise excess liquidity and allow the naira to adjust to market conditions rather than defending an artificial exchange rate level.
“The overarching policy objective should therefore be to convert the crisis into an opportunity while consolidating hard-won reform gains,” the group stated.