With the U.S. renewed strikes on Iran following the Strait of Hormuz saga, global energy markets and international trade face another round of uncertainty, with experts saying its echoes will reverberate across the globe for sometime to come; BENJAMIN UMUTEME writes.
The renewed hostilities between the U.S. and Iran following the Strait of Hormuz has again put pressure on energy markets, as UNCTAD warns that vulnerable economies will continue to face lasting inflationary, fiscal, and food-security shocks from the initial 100-plus day closure. For Nigeria, a major crude exporter yet heavy importer of refined fuel and fertilisers, the episode delivered a painful “good news, bad news” mix – higher oil revenues offset by soaring import costs, inflation, and growth risks.
UNCTAD’s core assessment
UNCTAD’s June 2026 briefing, “Strait of Hormuz Disruptions: Beyond reopening – lasting impacts on vulnerable economies,” frames the initial reopening as “a first step toward a progressive recovery of energy markets and international trade,” but stresses that negative effects have already rippled through the global economy. The report identifies 61 vulnerable economies with dual exposure to oil and cereal import shocks, including 35 least developed countries and 26 small island developing States.
The UN trade body explains that domestic food and fuel prices kept rising even after international oil and grain prices started to fall, because higher input costs, shipping delays and expensive freight feed into local markets.
“The first point is that the shock does not end with the reopening (of Hormuz), no matter what the headlines say,” said UNCTAD spokesman Marcelo Risi, and called the initial reopening a “necessary, but insufficient” condition for restoring trade.
Short-term impacts
In the short-term, the closure sent Brent crude prices above $90 per barrel initially, then to peaks above $110 during the most intense phase of the US–Israel–Iran confrontation.
This triggered a rapid transmission to domestic costs in many countries. For Nigeria, the global oil shock “trickled down into higher domestic fuel and transportation costs,” pushing headline inflation back up to 15.93% in May 2026, after an 11-month disinflation streak.
Higher energy and fertiliser prices have also intensified cost-of-living pressures, particularly for households that already struggled with inflation before the crisis. UNCTAD notes that a real food price increase of 5% is associated with a higher risk of child wasting, especially among poor children and rural landless households.
Fiscal pressures have also mounted. Governments facing higher import bills for fuel, food and fertilisers have been squeezed by tighter public finances, heavy debt servicing burdens, exchange rate risks and declining remittances and aid. For many vulnerable economies, these constraints mean less room to cushion households and firms through subsidies, social transfers or emergency financing.
Long-term risks
UNCTAD warns that the long-term impact will be uneven and costly, particularly for vulnerable economies that cannot easily absorb higher import bills or rebuild supply chains quickly. Normalisation of trade will take time: while international energy prices can adjust fast, shipping routes, insurance arrangements and value chains need months to adapt.
Accordingly, structural vulnerabilities exposed by the crisis include: Limited diversification of trade sources, leaving many countries dependent on a single chokepoint or supplier; weak domestic resilience in energy, food and logistics systems, increasing exposure to external shocks, and high external debt and exchange rate fragility, which reduce the ability to finance essential imports during crises.
The report calls for investment in resilience, including diversification of trade sources and other domestic resilience measures, conditional on financial constraints, and stresses that international support is needed to improve vulnerable economies’ ability to cope.
Nigeria’s position
Nigeria’s position in the Hormuz crisis is paradoxical. As a major crude exporter, it benefited from higher global oil prices, with Brent hovering around $88–$90 per barrel after the initial spike. This boosted government’s revenue and foreign exchange inflows, strengthening the oil window of the fiscal framework.
However, Nigeria remains heavily dependent on imported refined petroleum products, fertilisers and many food items.
According to economic expert, Dr. Emmanuel Eche, “While Nigeria is earning more from its crude oil exports, the country is also paying much more for the petrol it imports.” The result has been classic “good news, bad news” situation: higher export earnings, but sharper cost-of-living pressures for households and businesses.
Industry experts in the built environment sector warn that even if higher oil prices strengthen government’s revenue, the broader economic effects place significant pressure on property development, infrastructure delivery and housing affordability, as higher fuel prices affect transportation, logistics, electricity generation and manufacturing costs.
Estimated losses, economic costs
While UNCTAD did not provide a single Nigeria-specific loss figure, analysts noted that inflation rose to 15.93% in May 2026, reversing an 11-month disinflation trend, driven largely by global oil shocks and rising energy costs.
Fuel prices surged with retail petrol prices climbing to ₦1,250–₦1,350 per litre in cities such as Ibadan and Abuja, with some outlets reporting prices as high as ₦1,300, and analysts warning of potential rises to ₦2,000 if the crisis continued.
Transport and logistics pressures climbed higher, lifting transport fares, logistics costs and input prices for manufacturing and agriculture, feeding into broader inflation and reducing real incomes.
These factors implied substantial welfare losses for households, particularly low-income groups that spend a large share of their budgets on food, transport, and energy. The combined effect of higher inflation, higher transport costs, and reduced purchasing power likely eroded real consumption and slowed non-oil growth in the short term.
Policy experts’ views
Several Nigerian policy experts and analysts have highlighted the need for both immediate and structural responses.
Dr. Emmanuel Eche urged the government to use increased oil earnings to “cushion the impact” through temporary subsidies or by tapping strategic reserves, warning that without intervention “the cost of living is likely to keep rising”.
He emphasised that Nigeria’s vulnerability stems from its dependence on imported refined fuel and limited capacity to absorb external shocks.
Environment expert Oluwabusuyi Adonis Fakanlu argued that while higher oil prices may boost government’s revenue, the country’s dependence on imported refined petroleum products means that higher global energy prices quickly translate into higher domestic costs, with consequences for construction, real estate and infrastructure.
He noted that “geopolitical uncertainty linked to a Hormuz disruption could reduce investor appetite for emerging markets, including Nigeria.”
Experts further say the crisis provides an opportunity for structural reform: “Investing in domestic refining capacity, expanding renewable energy, and reducing reliance on imported fuel and food inputs to reduce exposure to external shocks.”
Ways Nigeria can mitigate Hormuz-style shocks
For experts, several mitigation strategies are evident. These include: Accelerating domestic refining and fuel self-sufficiency. The Dangote refinery expansion and other projects could reduce dependence on imported refined products, insulating Nigeria from global price spikes and shipping disruptions. Greater self-sufficiency would also stabilise foreign exchange demand and reduce vulnerability to chokepoint closures; expanding strategic fuel and food reserves; building and regularly replenishing strategic reserves of fuel, fertilisers and key food items would allow the government to buffer short-term price shocks and keep markets stable during disruptions.
They also include targeted fiscal support and social protection: This means that temporary, targeted subsidies or cash transfers for low-income households during energy shocks can prevent sharp drops in real consumption and protect vulnerable groups, including children at risk of food insecurity.
Diversifying trade and energy sources: Diversifying import sources for fuel, food and fertilisers beyond regions dependent on Hormuz shipping routes would reduce exposure to single-choke point risks, aligning with UNCTAD’s call for diversification of trade sources.
Investing in renewable energy and power sector resilience – expanding solar and other renewable energy sources can reduce reliance on imported fuel for power-generation and ease pressure on the transport and electricity sectors during energy shocks.
Strengthen macro-economic buffers. Building fiscal buffers, managing external debt prudently and maintaining flexible exchange rate policies can improve Nigeria’s ability to finance essential imports and stabilize the economy during external shocks, as UNCTAD highlights for vulnerable economies.
Warning
The temporary reopening of the Strait of Hormuz calmed markets, but the shock “does not end with the reopening.”
The broader lesson of the Hormuz disruption is that domestic refining capacity alone does not guarantee insulation from global shocks. Without reliable crude feedstock, a functioning strategic reserve and disciplined institutional execution, analysts warn that the next chokepoint crisis, wherever it originates, could once again reach Nigerian pumps and household budgets with full force.
And as Marcelo Risi of UNCTAD put it, the deeper task is to build resilience so that the next disruption does not translate into prolonged hardships for households and businesses.
