Naira Under Siege: Middle East war drives currency to two-month low as petrol hits N1,300

The Nigerian naira has come under severe pressure from the escalating Middle East conflict, slumping to its weakest level in two months and sending petrol prices soaring to as high as N1,300 per litre, confronting Nigerian households with yet another punishing cost-of-living shock.

The local currency depreciated to N1,425 per dollar in the official market on March 9, 2026, its lowest in two months, following capital flight triggered by the raging conflict in the Middle East. The naira, which had been approaching N1,300 per dollar in recent weeks, has sharply reversed course.

In the parallel market, the situation is starker, with Bureau De Change operators in Lagos selling the dollar for as high as N1,450 and buying at N1,420. The average exchange rate for 2026 has settled around N1,389 per dollar, against a 2026 budget benchmark of N1,400.

The currency pressure is compounding an already severe fuel crisis. Nigerians have been hit with a fresh wave of petrol price hikes, with the commodity selling at between N1,200 and N1,300 per litre in major cities after Dangote Petroleum Refinery raised its gantry price from N995 to N1,175 per litre, citing the rise in global crude oil to $110 per barrel. Diesel has also surged, with NNPC outlets selling at N1,680 per litre in Lagos, while MRS outlets priced the product at N1,380 per litre.

The twin shock, a weaker naira and costlier fuel, traces directly to the US-Israeli war on Iran. The immediate trigger was the joint US-Israeli operation that killed Iran’s Supreme Leader, Ayatollah Ali Khamenei, sending Brent crude surging sharply and disrupting global oil markets. Analysts say that during geopolitical crises, investors seek safe havens, and frontier markets like Nigeria risk capital outflows even as higher oil prices nominally strengthen foreign exchange reserves, a delicate and painful balancing act.

ALSO READ: Nigeria’s fuel price rollercoaster: A distant war, three price hikes, one small cut

Brent crude briefly touched $116 per barrel earlier this week. Nigeria’s 2026 federal budget was benchmarked at $64.85 per barrel, meaning the surge represents a potential revenue windfall — but analysts caution that the gains may be largely illusory. “If domestic oil output remains capped near 1.4 million barrels per day due to theft and underinvestment, Nigeria captures only price gains, not volume gains. The gains are immediately swallowed by the rising cost of importing the very fuel we need to keep our economy moving,” one analyst warned.

The Centre for the Promotion of Private Enterprise warned of a double-edged impact, noting that while higher oil receipts typically ease pressure on the naira by boosting foreign exchange liquidity, deregulated fuel pricing means higher international crude costs translate directly into rising petrol, diesel, and aviation fuel prices — feeding into transportation, food distribution, and manufacturing costs and intensifying inflationary pressure. “While government revenues may rise, household welfare could deteriorate — creating a divergence between fiscal gains and social outcomes,” CPPE cautioned.

Economists have warned that inflation could surge to between 30 and 35 per cent if fuel and energy prices continue to climb, and that some entrepreneurs licensed by the Federal Government are still importing refined fuel products, further draining the country’s scarce foreign exchange resources even as domestic refining capacity expands.

For ordinary Nigerians, the pain is already tangible. A Lagos taxi driver captured the popular frustration plainly: “I used to pay N775 per litre last week. Now it’s almost N1,040. How do I pass this to passengers without losing money?” Analysts say the crisis underscores an urgent and long-delayed imperative: structural reform, energy diversification, and a reduction of Nigeria’s deep dependence on imported refined fuel if the country is to weather the next inevitable global shock.