The Centre for the Promotion of Private Enterprise (CPPE) has issued a warning about the potential mixed impact of the escalating Israel-Iran conflict on Nigeria's economy, highlighting both possible benefits and risks.
Dr. Muda Yusuf, Chief Executive Officer of CPPE, outlined these implications in a statement released on Sunday, following intense missile exchanges between Israel and Iran over the past 48 hours.
The conflict escalated on Thursday when Israel struck an Iranian nuclear site, prompting retaliatory action from Iran. Both countries have continued their armed confrontation, with significant casualties reportedly recorded on both sides.
Oil Price Surge and Economic Implications
According to CPPE, the immediate consequence of the conflict has been a spike in global crude oil prices amid concerns over potential supply disruptions. The think tank noted that crude oil prices had surged to $75 per barrel from $65 per barrel in just one week, representing a 15% jump.
"A major driver of energy prices in Nigeria is the global crude oil price," the CPPE stated. "This has obvious implications for petroleum product prices globally. Economies around the world [Nigeria inclusive] would witness a surge in the price of petrol, diesel, jet fuel, gas, and related products in the near term."
The organization emphasized that the Israel-Iran war has compounded the strain already imposed on the global economy by the ongoing Russia-Ukraine conflict.
Dual Impact on Nigeria's Economy
The CPPE highlighted that the implications for Nigeria are dual in nature. While there may be a revenue windfall due to higher oil prices, there would also be a corresponding rise in energy costs across the country.
"Energy cost is a major factor in the Nigerian inflation equation. It impacts production cost, logistics cost, transportation costs, and the cost of power generation. This presents an inflationary scenario," the statement explained.
The organization warned that these additional costs would likely be passed on to final consumers, depending on the degree of consumer resistance.
Furthermore, CPPE pointed to a global inflation dimension, noting that energy prices have worldwide inflationary implications. "Therefore, there is also an expectation of imported inflation in the unfolding geopolitical scenario," the statement added.
Stay updated with the latest economic news and analysis by following BenriNews on our social media platforms:
