As global crude oil prices surge amid escalating tensions in the Middle East, many oil-producing countries are bracing for what could become a new wave of windfall revenues.
For Nigeria, however, the question is no longer whether prices will rise, but
whether the country — and its citizens — will actually benefit.
The ongoing crisis involving the United States, Iran and Israel has unsettled global energy markets, pushing crude oil prices above $100 per barrel. Analysts say the disruption has been worsened by the closure of the Strait of Hormuz, a strategic waterway through which roughly one-fifth of the world’s oil and natural gas supplies pass.
Ordinarily, such a development would be good news for a major oil exporter like Nigeria.
Higher oil prices mean more revenue for government and stronger foreign exchange inflows.
But for millions of Nigerians struggling with rising living costs, the reality appears far more complicated.
In many resource-rich nations, a spike in crude prices translates into economic relief. In Nigeria, however, history suggests that the opposite can happen. As oil prices climb, the cost of petrol, transportation and food often rises, intensifying the hardship already faced by households.
Despite being Africa’s largest oil producer, Nigeria still imports a significant portion of its refined fuel. This structural weakness means that higher global oil prices can quickly translate into higher domestic fuel prices.
In recent months, petrol prices have surged beyond N1,000 per litre in parts of the country, squeezing household budgets and raising operational costs for businesses. Transportation fares have climbed sharply, and food inflation continues to worsen.
Energy experts say the paradox lies in Nigeria’s long-standing dependence on crude exports and refined fuel imports.
This is not the first time Nigeria has stood on the brink of an oil windfall.
During the Gulf War, triggered by the invasion of Kuwait by Saddam Hussein, global oil prices surged dramatically. At the time, Nigeria was producing about 1.8 million barrels of crude per day and earned billions of dollars in unexpected revenue.
However, the Pius Okigbo Panel, which later investigated the windfall during the military administration of Ibrahim Babangida, reported that roughly $12–13 billion accrued during the crisis.
Much of the money, the panel found, was kept outside normal government accounting systems, and a significant portion could not be properly accounted for.
The episode remains one of the most cited examples of how sudden resource wealth can disappear without transparent management.
Structural problems persist
Today, decades later, many of the same challenges still exist.
Nigeria’s crude production has been repeatedly constrained by oil theft, pipeline vandalism and underinvestment in the sector. Even when global prices surge, these constraints limit the country’s ability to increase output and maximise earnings.
Another complication is the structure of Nigeria’s oil financing arrangements. Large volumes of crude production are tied to forward-sale agreements and pre-export financing deals, which means that a portion of future oil revenue has already been committed.
Meanwhile, the country continues to grapple with a widening budget deficit and mounting public debt.
Although the massive Dangote Refinery in Lagos was expected to transform Nigeria’s refining capacity, industry observers say the facility still faces supply challenges and has had to import crude oil to sustain operations.
For ordinary Nigerians, the consequences of rising oil prices are already visible.
Higher fuel costs increase transportation fares, push up food prices and raise electricity generation costs for businesses relying on diesel generators. Small enterprises, which form the backbone of Nigeria’s informal economy, are particularly vulnerable.
What should theoretically be a national advantage — being a major oil producer — increasingly feels like a burden to citizens.
Economists warn that unless Nigeria’s economic structure changes, oil price spikes may continue to deepen inequality rather than reduce hardship.
A familiar dilemma
Experts say the real issue is not the possibility of another oil windfall, but how Nigeria manages it.
If global prices remain above the benchmark used in the federal budget, the country could generate billions of dollars in excess revenue within a short period. Yet without strong fiscal discipline, transparency and strategic investment, such gains may once again fail to translate into lasting development.
Analysts recommend that any additional revenue be channelled into savings mechanisms such as the Nigeria Sovereign Investment Authority and the Excess Crude Account, which were created to stabilise the economy during oil price volatility.
They also argue that Nigeria must invest aggressively in domestic refining, gas development, infrastructure and industrialisation to reduce dependence on crude exports.
Beyond the oil illusion
Ultimately, Nigeria’s relationship with oil remains a story of enormous potential repeatedly undermined by structural weaknesses and governance challenges.
The latest Middle East crisis may push global crude prices even higher. Government revenues could increase and foreign exchange inflows may improve.
But unless deeper reforms are implemented, the benefits may remain largely invisible to the citizens whose lives are most affected by rising costs.
For many Nigerians facing escalating hardship, the question therefore remains painfully simple: if oil prices are rising again, why does life keep getting harder?
