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Private Company Promotion Center [CPPE] has warned that the ongoing tension between Israel and Iran can trigger an increase in energy costs, improve inflation, among many other risks.
This warning is contained in a statement by Think-Tank Economics in a statement on Sunday, June 15, 2025.
According to Dr. Young Yusuf, Director/Chief Executive Officer, CPPE, the outbreak of the war between Israel and Iran has added a disturbing dimension to the global challenges that have been curved.
He warned that the economy around the world is currently wrestling with an increase in geopolitical tension triggered by the Russian Ukraine War and Israeli-Hama conflict, while there is also a deep uncertainty created by disruption of tariffs that have never occurred before by the Trump government.
“For the Nigerian economy, the implications are diverse. The development indicates a combination of risk and a bad side for the economy,” he began.
Speaking of the risks, Joseph said, “A main driver of energy price in Nigeria is the price of global crude oil. With the outbreak of Israeli-Iran war, crude oil prices have jumped to $ 75 per barrel from $ 65 per barrel per week before.
“This is a 15% leap in a few days. This has a clear implication for the price of petroleum products globally. Economics around the world [Nigeria inclusive] will witness the surge in the price of gasoline, diesel, jet fuel, gas and related products in the near future. This will have broad implications for many economies and businesses, “he began.
In inflation, the former Director General of the Lagos Chamber of Commerce and Industry noted that energy costs are a major factor in the Nigerian inflation equation.
“This (inflation) has an impact on production costs, logistics costs, transportation costs, and power plant costs. This presents an inflation scenario. This additional cost will be forwarded to the final consumer, depending on the level of consumer resistance.
“There is also a dimension of global inflation. Energy prices have the implications of global inflation. Therefore, there is also the hope of import inflation in the ongoing geopolitical scenario,” he added.
Yusuf further noted that the crisis also indicated the implications of interest rates.
“High inflation encourages interest rates because the monetary authority responds to inflation from the current geopolitical sacred wind. The more stringent monetary policy regime is expected in Nigeria and other monetary jurisdiction.
“The hope is that economy throughout the world can experience new pressure on interest rates. Higher global interests can have a negative impact on the flow of portfolios with implications for foreign reserves.
Yusuf further noted that regardless of the risk, the situation still holds several bad sides.
“If the current conflict continues and increases, the Nigerian economy can record an increase in a number of fields: The surge in crude oil prices will have an impact on foreign exchange income, oil becomes the largest forex producer for the country. This will even have more impact if output performance improves.
“The price of crude oil has jumped to $ 75 per which is about 15% higher than before the outbreak of the Israeli -Iranian conflict. This development will also have a positive impact on the country’s foreign reserves, ensuring better forex liquidity and in the end the stability of Naira’s exchange rates,” he said.
He also noted that government revenue would increase because the oil sector currently contributed around 50% of government revenues.
“Therefore, an increase in crude oil prices will have a significant impact on government income. Increased income will have a positive impact on fiscal consolidation and easily moderate fiscal deficit growth.
He added that investment in the oil and gas sector will record better returns if the conflict remains. High oil prices are good news for upstream oil and gas investors.
By: Babajide Okeowo
