A recent BMI report titled “US-Iran Conflict: Assessing FX Risks in Sub-Saharan Africa in an Escalatory Scenario” has projected that Nigeria stands to benefit from a sustained increase in global oil prices caused by the ongoing conflict between Israel, the United States, and Iran.
The conflict, which saw the United States and Israel launching attacks on Iran last Saturday, has already led to a sharp rise in global oil prices.
Crude oil prices surged on Thursday toward $84 a barrel, the highest this year, outpacing Nigeria’s 2026 budget benchmark of $64.85 per barrel.
According to Bloomberg, Brent crude, the global oil benchmark, jumped 12% over the first three days of the week, while West Texas Intermediate was near $78.
What the report is saying
The BMI report highlights that while Sub-Saharan Africa’s (SSA) major currencies will be impacted unevenly, oil-exporting countries like Nigeria are likely to see positive effects from higher crude prices.
It states that a significant escalation in the Middle East conflict would not only drive energy prices higher but also disrupt key shipping routes. This could lead to a deterioration in the terms of trade for fuel-importing nations while benefiting oil-exporting countries like Nigeria.
- “A sustained rise in global oil prices would be net positive for the naira, especially given that Nigeria now has substantial domestic refining capacity,” the report notes.
However, it also warns that a flight to safe-haven assets might reduce portfolio inflows, which have been instrumental in improving Nigeria’s external buffers in recent quarters.
The report also mentions that Angola could benefit from higher oil prices, although its limited refining capacity may dampen the overall effect.
While Angola’s exports could rise, the country remains reliant on refined fuel imports, which may offset some benefits.
Backstory
Iran has targeted the U.S. Embassy in Riyadh with drones on Tuesday, intensifying hostilities across the Middle East.
- This is as the United States and Israel continue sustained airstrikes on Iranian territory.
- The conflict, which began on Saturday, has already resulted in the deaths of senior Iranian leaders and shows little sign of easing.
U.S. President Donald Trump described the campaign as potentially lasting more than a month.
More insights
The impact on other Sub-Saharan African countries varies:
- South Africa: While higher gold prices may provide some support, rising energy costs and risk aversion will weigh on the South African rand. South Africa’s close ties with Iran could also exacerbate political risks and affect foreign demand for its assets.
- Kenya: The report points out that Kenya, as a net oil importer, will face greater exposure to the US-Iran conflict, and a prolonged global risk-off environment could lead to FX depreciation and macroeconomic instability.
- Ghana: Ghana’s crude trade position is largely balanced, meaning the country’s external sector will experience limited effects from higher oil prices. However, as a major gold producer, Ghana could benefit from a further rise in gold prices, which has already supported the country’s reserve accumulation.
What you should know
Amid rising tensions, Iran denied reports on Thursday that it had shut down the critical Strait of Hormuz shipping route. The country reaffirmed that maritime navigation through the strait continues according to international law, rejecting allegations that it had blocked the waterway.
Iran’s mission to the United Nations emphasised that these reports misrepresented its position on freedom of navigation in the region.
The ongoing conflict between the US, Israel, and Iran continues to affect global markets, with rising oil prices becoming a key factor influencing both economic opportunities and risks in the region.
