NECA: Rising Oil Prices Translating into Increased Energy Costs in Nigeria

• Poses significant pressure for manufacturing, agriculture firms

Dike Onwuamaeze

The Nigeria Employers’ Consultative Association (NECA) has warned that rising global oil prices are translating into increased energy costs in Nigeria with significant consequences for firms in manufacturing, agriculture and logistics, who are already under significant pressure

NECA gave this warning yesterday in its press statement titled “Oil Gains, Rising Costs: NECA Warns of Growing Pressure on Businesses and Households.”

The Director General of NECA, Mr. Adewale-Smatt Oyerinde, noted in the statement that the war in Iran is driving up international crude oil prices and escalating fuel prices and worsening inflationary pressures across the Nigerian economy.

Oyerinde stated the situation reflected a growing paradox, where increases in crude oil prices are pushing up domestic energy costs, placing pressure on businesses and eroding the purchasing power of citizens.

He said: “What we are witnessing is Nigeria’s oil paradox. Rising crude oil prices are pushing up domestic energy costs, squeezing businesses and worsening the cost of living for citizens.”

He noted that fuel prices have risen sharply in recent days, with petrol prices in some locations exceeding N1,300 per litre and diesel approaching N1,800 per litre, reflecting the impact of global oil price movements.

Oyerinde stressed that energy costs sit at the heart of Nigeria’s economy as energy is the engine of production and distribution.

He said: “Once fuel prices rise, the effects are immediate and widespread, transport costs increase, food prices rise, and the overall cost of doing business escalates.”

He stressed that businesses, particularly in manufacturing, agriculture, and logistics, are already under significant pressure.

“For many firms that rely on diesel for operations, current price levels are becoming increasingly difficult to sustain. Profit margins are shrinking, and businesses are being forced to either pass on costs or scale down operations,” he said.

He further noted that global oil prices have surged in response to geopolitical tensions, with Brent crude prices rising above $110 per barrel, intensifying cost pressures across energy markets.

Oyerinde clarified that while the Middle East conflict have contributed to the rise in oil prices, the impact is exposing deeper structural weaknesses, underinvestment, weak infrastructure, and inefficiencies in Nigeria’s energy value chain.

“This situation is not only driven by external factors, it is also reflecting ongoing constraints within the energy value chain, including supply inefficiencies and infrastructure limitations.”

He warned that without urgent intervention the situation could escalate. “If this trend continues unchecked, we risk business closures, job losses, and a deeper cost-of-living crisis.”

Oyerinde therefore called for immediate action by the government to stabilise the downstream sector and support vulnerable industries.

He said: “Government must act swiftly to ease supply constraints, stabilise prices, and provide targeted relief for critical sectors.

Oyerinde emphasised the need for structural reforms on the long-term outlook. He said that “Nigeria’s resilience will not be determined by oil prices, but by how effectively we manage them.

“This is a moment to strengthen institutions, improve transparency, and invest in sustainable energy solutions.”

He cautioned that if properly managed, this could strengthen our economy.

“If not, the gains from rising oil prices will be completely eroded by inflation and economic hardship,” he said.