War-Driven Oil Surge Could Reshape Nigerian Stock Market, Experts Warn

Financial market analysts have warned that the ongoing geopolitical conflict involving the United States, Israel and Iran could have far- reaching implications for Nigeria’s economy and capital market, with rising crude oil prices likely to trigger inflationary pressures and shift investor behaviour within the financial system.

The warnings come amid a surge in global oil prices driven by fears of supply disruptions in the Middle East, particularly around the strategic Strait of Hormuz, a key route for global energy shipments. Analysts say disruptions in the region could push crude oil prices above $100 per barrel, raising inflation and slowing global economic growth.

Speaking on the development, the Managing Director of Highcap Securities, Mr. David Adonri in an exclusive chat with THE WHISTLER said the escalating conflict is already impacting the global economic landscape through higher energy prices and disruptions to international trade.

According to Adonri, the spike in crude oil prices, now approaching the $100 per barrel mark, may provide short-term fiscal benefits for Nigeria as an oil-exporting nation but could simultaneously worsen domestic economic pressures.

“As a result of the Iran war, the price of crude oil is already approaching $100 per barrel,” he said. “The conflict is disrupting global trade flows and is likely to slow global GDP growth while pushing inflation higher across economies.”

Adonri noted that while the Federal Government may benefit from increased external revenue due to higher oil prices, the domestic economy could face negative consequences as the rising cost of energy feeds into inflation.

He explained that the likely upward adjustment in the local prices of petroleum products—triggered by the global oil rally—could worsen inflationary pressures in Nigeria, given the country’s heavy reliance on imported goods and services.

“While government revenues from crude oil exports may increase, the adjustment in domestic petroleum prices, combined with Nigeria’s import dependency, could escalate inflation and push interest rates upward,” he said.

Adonri warned that rising interest rates could weaken the equities market as investors increasingly shift their funds toward fixed-income securities that offer safer and potentially higher returns.

“This development could slow activity in the equities market and lead to a migration of financial assets from equities to debt instruments,” he added.

Similarly, the Managing Director of Arthur Stevens Asset Management Limited, Mr. Tunde Amolegbe, said early signs of the conflict’s economic effects are already visible within the Nigerian stock market.

According to him, investors are beginning to reposition their portfolios in response to rising energy costs and potential macroeconomic pressures.

“We are already seeing this play out in the market,” Amolegbe said. “Oil and energy-related stocks are currently enjoying strong investor patronage, while consumer goods and industrial stocks are beginning to backslide because their operating costs are likely to rise sharply within a short time.”

He explained that companies operating in the consumer goods and manufacturing sectors are particularly vulnerable to rising energy and transportation costs, which could significantly increase production expenses and reduce profitability.

However, despite these concerns, some market operators believe the Nigerian capital market has so far shown resilience in the face of global geopolitical uncertainty.

The Group Managing Director of Crane Securities Limited, Mr. Mike Eze, said Nigeria’s capital market is currently supported by strong corporate fundamentals and impressive earnings posted by listed companies.

Speaking with The Whistler, Eze noted that Nigeria’s position as an emerging market with unique structural characteristics has helped cushion it from the immediate shocks currently affecting some global markets.

“Our market is an emerging market with its own peculiar characteristics,” he said. “While some developed markets are already experiencing pressure due to the ongoing U.S.–Israel–Iran conflict, Nigeria’s market has not yet felt any immediate negative impact.”

Eze pointed out that many Nigerian listed companies have reported strong financial performance over the past year, strengthening investor confidence in the market.

“A look at the financial results from the first quarter to the fourth quarter of the last accounting year shows very impressive corporate performances,” he explained. “Many companies are declaring strong dividends and bonuses, which is helping to sustain investor interest.”

He said these positive fundamentals have helped maintain market stability despite the growing geopolitical uncertainty.

Nevertheless, Eze cautioned that Nigeria cannot remain completely insulated from global economic shocks due to the increasing interconnectedness of international financial markets.

“In today’s globalised world, no market is entirely isolated,” he said. “Developments in advanced economies can eventually affect emerging markets like Nigeria because our capital market is also internationalised.”

He noted that foreign portfolio investors—including institutional investors and high-net-worth individuals—account for a significant share of investments in Nigeria’s stock market.

“As a result, global market developments could influence capital flows and investor sentiment in Nigeria over time,” he added.

Eze recalled that Nigeria’s stock market had previously demonstrated similar resilience during past global financial disruptions.

He cited the global market downturn of the late 1980s, when many international markets experienced sharp declines while Nigeria’s market initially remained stable due to strong underlying fundamentals.

“Our market did not crash immediately during that period because the fundamentals were still strong,” he said. “However, as global pressures eventually filtered through, the impact was eventually felt.”

According to him, the current stability of the Nigerian capital market can be attributed to strong corporate earnings, the market’s emerging-economy structure, and the country’s distance from the immediate theatre of the conflict.

“By and large, the strong fundamentals of listed equities, our status as an emerging market with unique characteristics, and the fact that Nigeria is geographically far from the war zone are key factors keeping the market stable for now,” he said.

Economic analysts say investors will continue to closely monitor developments in the Middle East, as prolonged geopolitical tensions could influence global oil prices, inflation trends, interest rates and capital flows across emerging markets, including Nigeria.