Nigeria's external financial position improved sharply as crude oil prices surged during the past seven months, yet the benefits have bypassed ordinary households facing soaring costs for fuel and food. Brent crude averaged $70.89 per barrel in February 2026, before climbing to $114.16 in September, a jump of about 61 percent. The Central Bank of Nigeria reported that gross foreign-exchange reserves rose from $49.69 billion on February 27 to $54.61 billion by September 14, an increase of nearly $4.9 billion. The naira also appreciated, moving from N1,368.50 per dollar to around N1,329.50 on September 25, a gain of about 2.9 percent. Yet this stronger external position masks deepening pressures on the domestic economy where transport, electricity and food production costs are already high.
Petrol and diesel prices have surged for ordinary Nigerians. By September, petrol prices in Lagos and Abuja had reached about N1,350 per litre, up from roughly N830 before the conflict began, while diesel exceeded N1,770 per litre. The International Monetary Fund reported that petrol and diesel prices rose by 22.5 percent and 16 percent respectively in March compared with pre-war levels. These increases ripple across the economy. Transporters pay more to move goods, farmers face higher costs for machinery and distribution, and manufacturers spend more on diesel to run generators. Businesses absorb some increases through lower profit margins, but many pass costs to customers, pressuring prices for food and essential goods while leaving households with less to spend on other needs. Olugbenga Olaoye, an energy economist and member of the United States Association for Energy Economics, explained the paradox: Nigeria exports crude but still imports fuel, so rising prices increase both revenues and costs simultaneously. Even with domestic refining capacity, locally produced petrol reflects the international value of crude oil.
Food inflation has accelerated despite overall price growth moderating. Headline inflation declined from 15.06 percent in February to 14.63 percent in September, yet food inflation moved the opposite direction, rising from 12.12 percent to 19.59 percent over the same period. This divergence matters because food accounts for a substantial portion of household budgets. Faruq Quadri, an economist at SPEC-Matrix, cautioned that falling inflation does not restore purchasing power. Inflation measures how quickly prices are rising, but the price level reflects actual costs. When inflation falls, prices do not return to earlier levels; they simply continue rising at a slower rate. Nigerians face the cumulative effect of earlier price increases, and unless incomes grow faster than prices, households remain under pressure despite moderating headline inflation.
Whether Nigeria converts the oil windfall into lasting gains depends on how effectively government spends the additional revenue. The IMF's June assessment projected that the conflict could reduce Nigeria's 2026 economic growth by 0.3 percentage points while higher fuel, food and fertiliser prices could push inflation above earlier expectations. Investment in electricity, transport infrastructure and agriculture could help lower production costs and improve food distribution. Better-targeted support could help vulnerable households manage immediate pressures. For savers and households, sustained benefits depend on whether income growth outpaces inflation and whether stronger government revenue translates into more affordable essential goods and lower production costs.