I have lost count of the number of times I’ve been asked about the implications of current oil market events for the Nigerian energy deal landscape in the last few days.
The calls usually begin with the same question: Where do you see oil going?
That is the wrong starting point. Yes, Brent has moved sharply as the US – Iran conflict escalates.
Yes, gas prices in Europe surged dramatically after attacks forced the shutdown of Qatari LNG production, with the European benchmark jumping nearly 50% in a single session, according to reporting by the FT citing ICE exchange data.
Yes, shipping through the Strait of Hormuz has slowed as insurers pull back, and banks such as JPMorgan and Barclays are modelling scenarios where oil could test $100 to $120 if disruption persists.
Price may be a visible symptom, but the deeper issue is structural.
Gas is the real shock, not oil
Oil dominates the headlines because it is the most recognisable benchmark, but actually, gas is the molecule that can destabilise economies. All LNG exports from Qatar transit the Strait of Hormuz, according to the International Energy Agency (IEA).
There is no alternative maritime route. If production is halted and flows are disrupted, the system cannot easily compensate. Liquefaction capacity elsewhere is largely committed.
When Russian pipeline gas was curtailed in 2022, European prices rose almost tenfold at peak, based on ICE data. Governments intervened with fiscal support, and industrial production slowed, while inflation rose.
The current risk is potentially larger in volumetric terms than the 2022 pipeline shortfall, according to analysis by the IEA.
That matters because gas is not just an energy commodity. It underpins electricity generation, fertiliser production and heavy industry. Fertiliser feeds food prices, which subsequently drive social stability. Oil can spike without immediately collapsing growth. Gas shocks travel faster and hit deeper.
Hormuz is a structural vulnerability
The US Energy Information Administration (EIA) estimates that roughly 20 million barrels per day (bpd) of petroleum liquids transit the Strait of Hormuz, about a fifth of global consumption. The IEA also estimates that only around 4.2 million bpd can be rerouted via alternative pipelines. Markets do not need a total closure to react, as Insurance withdrawal, tanker hesitancy and elevated military risk are sufficient to embed a premium into pricing.
There is a further complication. Much of OPEC’s spare production capacity is geographically concentrated within the Gulf. The barrels that are supposed to stabilise the market are actually exposed to the same chokepoint risk.
This is why the futures curve is more informative than the spot price. Short-dated contracts have moved sharply. Longer dated contracts remain more anchored. Goldman Sachs, in an analysis cited by the Financial Times, has framed the current move as a war premium embedded into the front of the curve rather than a wholesale rewriting of long-term price assumptions. Serious investors actually pay attention to that distinction.
High prices are not the same as sustainable prices
In moments like this, there is a temptation to assume that higher oil prices automatically strengthen producer economies. Mizuho, a major global financial institution, has estimated that every sustained $10 increase in oil prices trims global growth by roughly 10 to 20 basis points over the following year. Oil at $120 for a prolonged period would tighten financial conditions, reinforce inflationary pressure and constrain central banks.
Extreme price spikes often contain the seeds of their own reversal – demand slows, growth weakens and political pressure builds
For Nigeria, higher Brent increases nominal revenue. Yet production constraints can actually limit the benefit.
Nigeria has struggled in recent years to sustain output materially above 1.5 million barrels per day on an OPEC secondary source basis, and so higher prices only provide partial budgetary relief
At the same time, Nigeria still imports significant refined product volumes, despite the presence of the Dangote refinery. So, if global product markets tighten, landing costs rise. Transport, logistics and food inflation follow and a stronger dollar amplifies imported inflation and raises external debt servicing burdens.
Geography is being repriced
This is where the more strategic opportunity lies.
West African crude does not transit the Strait of Hormuz. Nigerian barrels are not dependent on Gulf shipping lanes, and Atlantic Basin LNG does not require passage through that chokepoint. In a world where concentration risk is suddenly visible, buyers themselves have to reassess reliability. Europe has already diversified away from Russian pipeline gas.
A prolonged Gulf disruption accelerates diversification logic once again. This is not about enjoying $100 oil. It is about demonstrating that your molecules can move when others cannot.
For indigenous Nigerian operators, the discipline test is immediate. Higher prices improve economics on paper; reserve based lending capacity improves, and cash flow projections strengthen. Yet volatility also increases insurance costs, logistics complexity and financing spreads.
Operators who treat a war spike asa permanent risk overcommitting capital. Operators who use elevated prices to strengthen balance sheets, invest in uptime and optimise brownfield production are better positioned if the premium fades.
From an equity perspective, valuation gaps will widen as sellers anchor to elevated spot and front-month curves. Buyers generally anchor to mid-cycle pricing and probability-weighted scenarios.
Crisis premium or structural advantage?
The central question I am being asked is whether this is good for Nigeria’s energy deal landscape. The more useful question is whether Nigeria can convert crisis premium into a structural advantage.
If the Strait reopens quickly and LNG production resumes, front month premiums will unwind. If the market internalises chokepoint risk more permanently, non-Gulf supply will command a reliability premium that extends beyond the immediate conflict.
Nigeria’s opportunity is not to celebrate higher prices. It is to demonstrate production reliability, regulatory clarity, operational stability in the Niger Delta and credible gas infrastructure development. Price is cyclical but geography is structural.
From where I sit, the winners in this energy shock will not simply be those who enjoy a temporary price uplift. They will be those whose barrels and molecules can be financed, insured and delivered in an unstable world. That is the lens through which I am viewing this moment in the Nigerian energy deal landscape.
Rolake Akinkugbe-Filani is Managing Director/CEO of EnergyInc Advisors Limited, a boutique advisory practice specialising in energy sector financings and transactions, deal execution and strategy across African markets. She also co-manages Chapel Hill Denham’s Nigeria Energy Resource Group (NERG) equity and quasi-equity fund.
