Nigeria may reap a massive N30 trillion oil dividend due to the turmoil in the Middle East, according to the NESG.

The Nigerian Economic Summit Group, NESG, forecasts that Nigeria may amass an additional ₦30 trillion in oil revenue, should global crude prices persist at elevated levels due to escalating geopolitical tensions in the Middle East, with the potential to earn as much as $57bn in external reserves.

n

In its policy brief, titled “Boom, Not Gloom,” the NESG highlights that the conflict involving the United States, Israel, and Iran has triggered a sharp rise in global oil prices, presenting both opportunities and risks for oil-exporting countries such as Nigeria.

n

Under a severe global escalation scenario, where crude oil prices average about $130 per barrel for six months, Nigeria could record a fiscal windfall of up to ₦30 trillion above the 2026 budget benchmark, according to the NESG.

n

This windfall could significantly bolster the country’s fiscal position and provide additional resources for public investment and debt reduction, if properly managed, as noted by the NESG.

n

The group also projects that stronger oil export receipts could boost foreign exchange inflows and lift Nigeria’s external reserves to about $57 billion, thereby strengthening the country’s external buffers and improving confidence in the foreign exchange market.

n

Higher oil revenues would also support the naira by increasing dollar liquidity in the domestic market, potentially moderating exchange rate pressures and easing imported inflation, the NESG stated.

n

However, the organisation warns that the benefits of the oil price surge are not guaranteed, citing structural challenges in Nigeria’s oil sector, including lower-than-budgeted crude oil production, infrastructure constraints, and persistent crude theft.

n

Nigeria’s oil production has recently averaged significantly below the government’s benchmark of 1.84 million barrels per day, the NESG notes, stressing that the production gap could reduce the size of the potential windfall.

n

The NESG further warns that higher global energy prices could translate into increased domestic fuel and transportation costs, thereby raising inflationary pressures in the short term.

n

To maximise the benefits of the oil price surge, the group urges the Federal Government to adopt a disciplined fiscal strategy by saving revenues above the budget benchmark rather than increasing spending.

n

The NESG advises that windfall earnings should be channelled into the country’s stabilisation and sovereign wealth funds, while part of the additional revenue should be used to reduce Nigeria’s rising public debt burden.

n

The group also cautions against any policy reversal on the removal of petrol subsidies, stressing that reintroducing subsidies would erode the fiscal gains from higher oil prices.

n

According to the NESG, Nigeria now has a rare opportunity to convert a global energy shock into stronger macroeconomic stability, provided policymakers maintain fiscal discipline and sustain ongoing economic reforms, as stated by Babajide Komolafe.