Israel –Iran tensions could disrupt Nigeria’s trade flow and supply chains as the nation finds itself caught in the fallout of a geopolitical conflict.
Though the war is thousands of miles away, the effects of the conflict in the Middle East are creeping into Nigeria’s supply chain, with experts saying that the escalating conflict will weaken the very systems that keep Nigerian trade running.
“In logistics, three things must move: The order, the information, and the goods,” Frank Ojadi, a professor of logistics and supply chain at the Lagos Business School told BusinessDay. “When conflict breaks out in a key trade region, it disrupts this flow, complicates movements and leads to delays and outright cancellations.”
Delays in moving inventories mean no operation. Ojadi warned that Nigerian importers, particularly in the oil and manufacturing sectors, face an even tougher road ahead.
“Most of the components we use in Nigeria’s oil sector are sourced abroad. Once supply chains are disrupted, insurance premiums go up, shipping costs rise, and the final product is less competitive,” he said.
In the past, shipping lines, including Maersk Line, Hapag-Lloyd, and CMA CGM, imposed surcharges on goods bound for Nigeria to offset the costs of diverting ships to longer routes due to attacks on the Red Sea, causing Nigerians to pay more to bring raw materials and finished goods into the country.
And this is already showing. Since early June, global oil prices have surged by over 10 percent, with Brent crude reaching $80 per barrel over the weekend following an attack by the U.S on Iran’s key facilities.
Iran may close the Strait of Hormuz, a key artery for global trade, after it launched missile attacks on a US base in Qatar on Monday.
Energy intelligence firm, Kpler, noted that over a third of global seaborne crude passes through the strait. A closure, even temporary, could be catastrophic.
“The oil market ramifications of a Hormuz closure would be unprecedented,” Kpler wrote in a June analysis. JPMorgan has warned of a worst-case scenario price surge to $120 or more, should a blockade or direct attack on shipping infrastructure occur.
Naturally, rising oil prices should benefit Nigeria as the West African country is a major crude exporter. But refining capacity is still limited, and much of the country’s petrol is still imported.
With fuel subsidies cancelled by the government, a rise in global oil prices raises local petrol prices.
But Ojadi cast doubts on Nigeria’s ability to ‘actually deliver’ when buyers come calling, stating that moving it could remain a challenge.
“Even if you have the crude, you still need vessels to move it and infrastructure to support it, and shipping companies are now levying surcharges tied to conflict zones,” he said.
According to Clarksons Research, the cost to charter large oil tankers through Hormuz has more than doubled. Marine cargo insurance premiums have also surged by 15 to 30 percent, with war-risk surcharges of 0.15 percent of a cargo’s value now applied to shipments.
Insurers had already begun hiking rates after the Russia–Ukraine war, and the latest Middle East escalation is driving them higher.
But it isn’t just oil. The added costs would not elude other sectors.
Imports from India made up over 11 percent of Nigeria’s total imports in the first quarter (Q1) of 2025. This included up to $3 billion worth of refined petroleum, alongside hundreds of millions in pharmaceuticals, vehicles, electronics, and machinery, many of which are shipped through the Middle East and the Red Sea.
Now, recent reports from Indian media show exporters are not having it easy. They are already urging their government to plan alternate shipping routes as the closure of Iran’s Bandar Abbas port and restrictions on airspace by Gulf countries are now forcing rerouting and air freight increases.
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Any rerouting will increase prices of imports for Nigeria’s manufacturers in the pharmaceutical and automobile industries, which is eventually passed on to the final consumers.
“Whether you’re trading in or out of Nigeria, these disruptions hit hard,” said Ojadi. “We import most of what we use to produce locally, and any delay raises costs and slows business.”
Some carriers have already suspended or rerouted flights to avoid conflict zones, which affect exports like fresh produce or time-sensitive goods from Nigeria to places like Dubai or Doha.
Ojadi pointed to the recent sabotage of a gas pipeline to Europe as an opening that could have favoured Nigeria. But due to underinvestment and years of neglect in the gas sector, the country is unable to plug the gap.
“We are losing out due to poor infrastructure,” he said. “It requires more research to realise where those pockets of opportunity are.
The Nigeria Customs Service told BusinessDay that it is ‘too early’ to measure or determine any real effect of the conflict on Nigerian trade in terms of volumes, timelines or value at the ports, but will monitor data for changes.
How vital is the Strait of Hormuz to Nigeria?
Escalating tensions in the Middle East have sent shockwaves through the global oil market, as the tussle between Israel and Iran continues, leading to moves to shut down the Strait of Hormuz.
While Nigeria lies thousands of miles away, the implications of any disruption in the world’s most critical energy chokepoint are felt at home and across the globe.
The Strait of Hormuz records an average of 20 million barrels of crude oil, condensate, and refined products passing through it daily, according to energy intelligence firm Vortexa. That’s about 20 percent of the world’s daily oil consumption moving through a single, narrow maritime corridor.
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At its tightest stretch, the Strait is only 33 kilometres (21 miles) wide, with each shipping lane just two miles wide. This cramped setup means hundreds of tankers must navigate the route daily, leaving little room for error, and making the passage dangerously easy to block or disrupt.
The US Energy Information Administration (EIA) called it the ‘world’s most important oil transit chokepoint.’
Without it, much of the oil extracted by the Organization of Petroleum Exporting Countries (OPEC) giants like Saudi Arabia, the UAE, Kuwait, and Iraq wouldn’t reach global markets, especially Asia.
Naval officials warn that any incident, military or otherwise, could instantly cripple supply chains and choke global energy markets.
With global oil prices spiking past $75 a barrel, Nigeria, a major crude exporter, stands to gain significant revenue. However, analysts say increased global shipping and insurance costs would impact imports, on which Nigeria depends.
Energy analysts are already discussing scenarios where oil prices could surge well beyond $100 per barrel if a shutdown occurs. This isn’t just about the direct flow; it’s about the fear premium, increased shipping costs, and the domino effect on global supply chains.
Late Monday, Brent Crude traded around $76.24 per barrel while WTI traded around $73.05, reflecting heightened tensions.
However, the gains come with trade-offs. Nigeria, which relies heavily on fuel imports, is expected to face rising domestic pump prices. This could stoke inflation and further pressure the already volatile naira.
“So if the fight continues, it could impact the drive to reduce petrol prices from local refineries, especially Dangote Refinery, which currently sources crude from the US. This will be temporary till the situation changes,” a senior executive at a major oil company said, pledging anonymity.
According to him, the federal government might prefer to export to get more FX due to higher oil prices than support domestic crude supply, which will help in the current budget plans. However, the country is also missing its target production.
On the global scene, over 82 percent of all crude oil and fuel shipments through the strait are bound for Asia, making the region especially vulnerable to blockages or conflicts.
According to the EIA, China, India, Japan, and South Korea alone account for nearly 70 percent of all oil and condensate transported through the waterway. These economies rely heavily on Gulf oil, and any delay or shock could cause energy shortages and price spikes.
Fears over potential conflict have already translated into sharp increases in shipping costs. Bloomberg cited data from the Baltic Exchange showing that the cost to transport fuels from the Middle East to East Asia rose nearly 20 percent over three trading sessions.
Shipping rates to East Africa jumped over 40 percent. The market is pricing in risk, and importers are beginning to feel the strain.
Though Iran has long used the Strait of Hormuz as geopolitical leverage, experts warn that blocking it would likely backfire.
“Iran’s economy heavily relies on the free passage of goods and vessels through the seaway,” said JP Morgan analysts Natasha Kaneva, Prateek Kedia, and Lyuba Savinova in a recent research note. “Cutting off the Strait of Hormuz would be counterproductive to Iran’s relationship with its sole oil customer, China.”
