The World Bank has warned that rising global oil prices could push Nigeria’s headline inflation up by about 3.1 percentage points, largely driven by higher transport and energy-related costs.
The caution was outlined in the Nigeria Development Update released on Tuesday, which cited the ongoing Middle East conflict involving the US, Israel, and Iran as a key factor.
The report noted that the conflict has caused a global oil price surge after Iran closed the Strait of Hormuz, pushing crude prices from below $70 per barrel in late February to over $100 by mid-March. Nigeria’s headline inflation in February stood at 15.06 percent.
In the update, the World Bank explained that the oil price surge would contribute 3.1 percentage points to headline inflation due to increased transportation and logistics costs across the economy.
“Overall, an increase in oil prices to about US$80 per barrel, representing a 31.1 per cent rise relative to the pre-conflict scenario, would directly add around 3.1 ppts to headline inflation under a full pass-through assumption, reflecting that transport and other energy-linked components account for roughly 10.1 percent of the CPI basket,” the report stated.
“This estimate captures only the direct effect, while the overall impact could be larger once indirect channels are considered, as higher fuel and electricity prices also raise transportation and logistics costs across the economy. These pressures are already visible in Nigeria’s downstream market,” it added.
The World Bank also noted that the halt in import licenses by Dangote Refinery in early 2026 contributed to rising petrol prices nationwide.
Additionally, the bank warned that the surge in global oil prices could drive up food prices, as rising costs of food and fertilizer internationally feed into domestic inflation.