Iran’s Palaver, Nigeria’s Dilemma

Beneath the Surface By Dakuku Peterside

Some wars begin with missiles and end with maps. Others begin far away and end up in the kitchen, the fuel station, the church, the mosque, the market stall, and the national mood. The escalating U.S.-Israeli confrontation with Iran is that kind of war for Nigeria. As of March 4, 2026, Brent crude had risen to about $81.40 a barrel after several days of disruption around the Strait of Hormuz, the narrow maritime chokepoint through which about 20 million barrels per day moved in 2024, roughly 20% of global petroleum liquids consumption. Once that artery convulses, the shock does not remain in the Gulf. It travels through shipping costs, insurance premiums, refined-product prices, exchange-rate expectations, and investor psychology. Nigeria, for all its distance from Tehran, sits directly in the path of those aftershocks.

Iran itself is a lesson in the tragedy of squandered possibility. The country remains one of the most naturally endowed states in the world: the U.S. Energy Information Administration says Iran ranked as the world’s third-largest oil reserve holder and the second-largest natural-gas reserve holder in 2023, with an estimated 1,200 trillion cubic feet of proved gas reserves. Yet abundance has not translated into serenity or broad-based prosperity. The same EIA brief notes that sanctions and underinvestment have constrained production and infrastructure, even as petroleum remains central to state revenue. The political story is harsher still. A 2024 U.N. fact-finding mission concluded that Iranian authorities were responsible for egregious abuses during the 2022 protest wave, documenting 551 deaths in 26 of 31 provinces, mass arrests, torture, sexual violence, and at least 22,000 people later “pardoned,” implying an even larger dragnet of detention and prosecution. Iran’s predicament is therefore not simply about geopolitics. It is about what happens when a state accumulates power but erodes legitimacy.

That is where the mirror turns toward Nigeria. We, too, are a richly endowed but institutionally strained republic. Our problem is not a lack of promise; it is the chronic weakness of the machinery that should convert promise into resilience. Afrobarometer’s recent findings are sobering: 80% of Nigerians say corruption worsened over the past year, 90% say the government is performing poorly in fighting it, and only 10% believe people can report corruption without fear of retaliation. The same research shows a telling hierarchy of trust: 60% of Nigerians say they trust religious leaders “somewhat” or “a lot,” compared with just 27% for the president, 19% for the National Assembly, and 23% for the electoral commission. That gap is more than a polling curiosity. It reveals a country where moral authority is migrating away from public institutions. A state can survive hardship; it struggles to survive sustained disbelief.

This is why the Iranian crisis matters to Nigeria far beyond oil. Yes, the first-order effect is fiscal. Nigeria’s 2026 budget is built on a benchmark oil price of $64.85 per barrel and a production assumption of 1.84 million barrels per day. At $81.40, Brent is about $16.55 above that benchmark, roughly 25.5% higher. In theory, that should brighten government revenue, ease financing pressure, and strengthen external buffers. The country already has a somewhat sturdier starting point than it did not long ago: the Central Bank says net FX reserves rose to $34.8 billion at the end of 2025, while gross reserves reached $50.45 billion by February 2026. On the surface, then, this war looks like a windfall. But windfalls are only blessings in countries with discipline; elsewhere, they become invitations to complacency.

Even on strictly economic grounds, the good news is less clean than it appears. Nigeria cannot fully monetise a high-price moment if it underproduces. Reuters reported that Nigeria pumped 1.48 million barrels per day in January against an OPEC+ crude quota of 1.5 million, while average daily production in the fourth quarter of 2025 was 1.58 million barrels per day. In other words, the country is still below the level assumed in the federal budget. That means Abuja may earn more per barrel, but not as much as headline prices suggest in aggregate. It also means that a surge in oil prices can coexist with continued fiscal frustration. This is the old Nigerian paradox in modern dress: the nation is lifted by price but limited by volume, cheered by the market but constrained by its own structural weaknesses.

Nor should anyone imagine that local refining has fully insulated Nigeria from the global storm. Dangote’s refinery is operating and was still issuing March tenders for gasoil and jet fuel this week, which is important because it gives the country more domestic processing capacity than in previous crises. But the deeper truth remains: crude, freight, and insurance are globally priced, and refined-product markets react to international shocks. Reuters reported that U.S. diesel prices jumped to $4.04 per gallon, the sharpest one-day rise since March 2022, with about 900,000 barrels per day of diesel and 350,000 barrels per day of jet fuel from the Gulf at risk. For Nigeria, where diesel powers logistics, farms, telecom towers, factories, banks, hospitals, and countless generators, that pattern is a warning. Even where local refining softens the blow, it does not cancel the transmission mechanism. Higher energy costs still flow through to transport fares, food distribution, manufactured goods, and household survival. That is how a foreign war becomes domestic inflation.

And that inflationary danger is arriving at a delicate time. Nigeria’s headline inflation had only just eased to 15.10% in January 2026, down from 15.15% in December, while food inflation slowed to 8.89%. The central bank responded with a small rate cut in February, suggesting policymakers believed the worst of the price spiral might be passing. A prolonged Middle East energy shock could interrupt that fragile descent. The damage would not be evenly shared. Wealthier Nigerians can absorb higher transport and food bills with discomfort; poorer households absorb them with skipped meals, school absences, reduced clinic visits, and deeper resentment toward the state. The political consequences of inflation in Nigeria are rarely immediate and dramatic. They are cumulative, granular, and corrosive. They erode faith one market day at a time.

The sociopolitical implications may, in fact, be even more combustible than the economic ones. Nigeria has already suspended Christian pilgrimages to Israel because of the deteriorating security environment. NiDCOM says it has received enquiries from Nigerians in Iran, Qatar, and the UAE about possible evacuation. And the emotional spillover is no longer hypothetical: Reuters footage and reporting show members of Nigeria’s Shi’ite Islamic Movement protesting in Kano after the reported killing of Iran’s supreme leader. That matters because Nigeria does not process Middle East conflicts as neutral foreign events. They are often filtered through faith, identity, grievance, and solidarity networks. Once that happens, external war acquires internal life.

History warns against dismissing this as symbolic theatre. Nigeria has a record of deadly confrontations involving the Islamic Movement of Nigeria and security agencies. Reuters reported serious clashes in Abuja in 2019, and again in March 2025, when security forces and Shi’ite protesters violently confronted one another in the capital. So when the current Iran crisis triggers demonstrations in Kano and elsewhere, the risk is not merely that people gather; it is that old fractures find a new script. A tense economic environment, polarised rhetoric, and an over-militarised response can quickly convert protest into disorder. That is how geopolitical shock migrates into domestic security strain.

Nigeria’s diplomatic response, therefore, must be guided less by emotion than by strategic sobriety. The country has reasons to preserve relations across multiple poles. Israel matters to Nigeria in areas such as security cooperation, technology, water management, and agriculture; the United States and Europe remain important sources of investment, trade, and diplomatic leverage. Yet Nigeria also has domestic constituencies that read Middle East conflicts through moral and religious lenses, not through the cold grammar of statecraft. This is why non-alignment, restraint, and a clear call for de-escalation are not signs of weakness. They are the only sane posture for a plural country that already imports too much volatility. The task of Nigerian diplomacy is not to perform indignation. It is to protect room for manoeuvre.

That caution is especially important because Nigeria’s external position, while improved, is still fragile in composition. The Central Bank reported a $6.83 billion balance-of-payments surplus for 2024, supported by a $13.17 billion trade surplus and $20.93 billion in remittances. But the same data show that while portfolio inflows more than doubled to $13.35 billion, foreign direct investment fell 42.3% to just $1.08 billion. That distinction matters. Portfolio money is fast money; it arrives quickly and leaves quickly. FDI is slower, stickier, and more developmentally valuable. In a world darkened by war risk, shipping disruption, and oil-price volatility, investors often retreat first from places where policy signals are noisy and political risk is hard to price. Nigeria cannot assume that an oil rally automatically outweighs geopolitical anxiety.

So the real lesson of this war for Nigeria is not that high oil prices are good or bad. It is that they are never enough. If Abuja treats this moment as a lucky revenue break, it will repeat the habits that made earlier booms evaporate into patronage, inflation, and debt. But if it treats this moment as a warning, then the path becomes clearer. Save part of the windfall. Publish the numbers transparently. Protect poor households before transport and food costs rise again. Accelerate refining, gas infrastructure, and renewable alternatives. Keep diplomacy calm and language disciplined. Above all, rebuild public trust through fairer elections, more credible institutions, and a state that is seen to serve rather than merely control. Iran’s agony teaches that a government can be armed and yet brittle, rich and yet weak, feared and yet hollow. Nigeria still has time to choose a different fate.

•Dr Dakuku Peterside is the author of two bestselling books “Leading in a Storm” and “Beneath the surface”.