Bismarck Rewane, chief executive of Financial Derivatives Company, has said the Naira could strengthen in the short term as rising global oil prices, triggered by the escalating US–Iran conflict, boost Nigeria’s export earnings.
Speaking on Channels Television, Rewane argued that the spike in crude prices improves Nigeria’s fiscal and external position, even though domestic petrol prices have increased.
“The reality is that if what we sell is oil and the price of oil has gone from $64 and is up over 25% our revenues are higher and our currency becomes stronger,” he said.
Global benchmark Brent crude has climbed sharply amid fears of supply disruption in the Middle East. Rewane warned that a prolonged conflict, particularly any disruption around the Strait of Hormuz — through which about 20 percent of global oil supply passes — could send prices significantly higher.
“In a runaway situation, this can go to $100 or $120. This is what happened in 1974 during the Yom Kippur War and in 1979 during the Iran-Iraq War,” he noted.
Effect on Naira
Bismarck Rewane noted for Nigeria, the immediate upside is stronger oil receipts. “For every dollar increase in the price of crude, it has a knock-on effect on the Naira,” Rewane said, adding that gross external reserves would likely improve if elevated prices persist.
However, the benefits come with trade-offs. Petrol pump prices have already risen by about N100 per litre, with the possibility of further increases if global crude prices remain elevated.
“Transportation costs will be higher, logistics costs will increase, and there will be strain on disposable income,” he said, warning that inflation could exceed earlier projections.
Rewane maintained that while oil revenue gains could support the exchange rate, the Central Bank would need to manage appreciation carefully to avoid the so-called Dutch disease — where a stronger currency undermines non-oil exports.
“I don’t think the central bank is going to be lured into a false sense of security. The buffers we need to protect us from shocks must be preserved,” he said.
He also cautioned that geopolitical risks remain elevated and could weigh on travel, tourism and Nigeria’s creative exports if global uncertainty persists.
“Geopolitical risks will remain elevated. There is a clear and present danger to the global economy,” Rewane said.
