POLICY BRIEF: IS WAR SLOWING NIGERIA'S ECONOMY

The ongoing escalation in the Middle East, encompassing the 2023–2024 Red Sea/Houthi crisis and the 2026 US-Israel-Iran conflict with disruptions to the Strait of Hormuz presents a mixed but predominantly challenging impact on Nigeria’s economic traction. Higher global oil prices (Brent crude exceeding $100–120/bbl against Nigeria’s 2026 budget benchmark of $64.85/bbl) offer short-term fiscal windfalls and foreign exchange inflows. This potentially deepens revenue traction in the oil sector. However, these gains are offset by surging domestic fuel and logistics costs, reignited inflation (projected +2.9–5.2 percentage points), supply-chain delays from rerouted shipping around the Cape of Good Hope, and secondary pressures on non-oil sectors. With this development, Nigeria’s fragile post-reform recovery (GDP growth of ~3.9% in 2025, projected 4.3–4.5% pre-shock) risks losing vital traction if the situation persists.