During the Gulf War which took place between Aug. 2, 1990 and Feb. 28, 1991, Nigeria reportedly earned an oil windfall of approximately 12.2 billion dollars to 12.4 billion dollars in additional oil revenue.
The 1990–1991 Gulf War was an international conflict triggered by Iraq’s invasion of Kuwait, driven by oil disputes and debt.
The war led to a surge in oil prices, and the extra revenue was generated between 1990 and 1991 under the administration of Gen. Ibrahim Babangida; however, records show the funds were not effectively utilised.
The 1994 Pius Okigbo Panel, set up to investigate the Central Bank of Nigeria (CBN), found that 12.2 billion dollars of the 12.4 billion dollars windfall was spent on non-essential, “off-budget” projects and was unaccounted for’’.
Interestingly, a similar situation has unfolded in the ongoing Middle East crisis.
This raises the question of how Nigeria could benefit significantly from the current windfall—a surge in global crude oil prices triggered by escalating regional tensions.
In retrospect, the coordinated military strikes by the U.S. and Israel on Iranian strategic infrastructure on Feb. 28 triggered retaliatory attacks across the Gulf region.
The escalation injected significant geopolitical risk into global oil markets, pushing prices sharply above pre-crisis levels.
The situation got worsened with Iran’s threat to attack ships transiting through the Strait of Hormuz through which roughly one-fifth of global oil supply passes.
Experts say the disruption to shipping through this narrow corridor is affecting global energy markets.
Against this background, Nigerians are upbeat that with Nigeria’s 2026 budget benchmark pegged at 64.9 dollars per barrel, the current international crude oil price hovering between 92 dollars and 100 dollars presents a major revenue opportunity for the country.
Experts say Nigeria’s geographic advantage allows it to benefit from higher global oil prices even when Gulf supply routes are disrupted.
They say Nigeria stands to benefit from a significant fiscal windfall as oil prices rise well above the 2026 budget benchmark of 64.9 dollars per barrel, which also assumes production of 1.84 million barrels per day and an exchange rate of N1, 400 per dollar.
In his submission, Dr Billy Gillis-Harry, National President, Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), cautioned that such windfalls must be properly managed to avoid repeating past mistakes associated with poor utilisation of excess oil earnings.
Gillis-Harry urged the Federal Government to invest any windfall from rising crude oil prices into refineries rehabilitation and strategic sectors of the economy to ensure long-term national benefits.
He said Nigeria could benefit significantly from the current surge in global crude oil prices triggered by escalating tensions in the Middle East.
Gillis-Harry recalled that a similar situation occurred during the Gulf War in the 90s when the country reportedly earned over 12 billion dollars in oil windfall from higher oil prices but did not fully convert the earnings into long-term economic gains.
He explained that Nigeria should save a significant portion of the extra revenue in institutions like the Nigeria Sovereign Investment Authority, which manages the country’s sovereign wealth fund.
“The government should channel the additional revenue into productive investments that can generate long-term value for the country.
“We have a sovereign wealth fund that should be strengthened; our refineries that have remained largely comatose need to be revived, and the gas revolution being promoted by the government should also receive stronger funding.”
Gillis-Harry said that while saving excess revenue was important, investing the funds in viable economic ventures capable of generating additional income for the country would be more beneficial.
Speaking on the implications of the U.S.-Israel tensions with Iran on global oil prices, the PETROAN president said geopolitical conflicts in major oil producing regions often disrupted global energy supply chains and pushed crude oil prices higher.
He said that although Nigeria was an oil-producing country, it still felt the impact of international price fluctuations because crude oil was traded and priced globally.
“Domestic refineries must purchase crude oil at international market prices.
“Crude oil is priced internationally; anybody that wants to buy crude oil in Nigeria will buy it at the international price.
“That is why you see fluctuations even in local refining operations.’’
Gillis-Harry cited the operations of the Dangote Refinery, explaining that the refinery purchases crude oil based on the international dollar price, even when payment was made in naira equivalent at the prevailing exchange rate.
“Nigeria cannot simply allocate all its crude oil production to domestic refineries because a large portion of the production is tied to joint venture agreements with international oil companies such as Shell plc. and Chevron Corporation.
“These companies invest in the exploration and production process, so crude oil ownership and allocation are shared under existing partnership arrangements,” he said.
The expert urged the government to focus on expanding Nigeria’s crude oil production capacity to about 4 million barrels per day to meet both domestic refining needs and international obligations.
Sharing similar sentiments, a renowned economist, Dr Chijioke Ekechukwu, argued that Nigeria could have recorded a major economic windfall from the current surge in global crude oil prices if the country’s crude oil production was operating at its full installed capacity.
Ekechukwu, Group Managing Director/CEO, Bristol Investment Limited, said Nigeria would have hit an economic jackpot if its crude oil production had reached its installed capacity or quota under the Organisation of the Petroleum Exporting Countries (OPEC).
According to Ekechukwu, Nigeria is currently producing far below its potential as an oil producing nation, thereby limiting the benefits it can derive from the current rise in global crude prices, triggered by tensions involving the U.S. and Iran.
The economist, however, warned that while government revenue may increase due to higher crude prices, the average Nigerian is already bearing the burden of rising petroleum product costs.
He said the surge in fuel prices had triggered increases in diesel costs, transportation fares and production expenses across multiple sectors of the economy.
“The rising energy costs are already pushing up prices of goods and services, thereby worsening the cost of living pressures on citizens.
“Nigerians are already experiencing high fuel costs, high diesel prices, rising transportation costs and increased production expenses.
“These increases are translating into higher prices of goods and services’, meaning the purchasing power of the average Nigerian is declining rapidly,” he said.
Ekechukwu added that although Nigeria’s treasury would experience some revenue boost from the high crude prices, the gains would be significantly lower than what the country could have realised if crude oil production were at optimal levels.
Deserving no less attention, another economic expert, Mr Yusha’u Aliyu, warned that the ongoing conflict could have far-reaching consequences for both regional and global economies, particularly in the energy sector.
Aliyu said the war, largely centered on regime change, had also exposed the enormous cost of modern technological warfare.
He noted that the deployment of advanced military systems comes with significant economic implications.
According to him, beyond the battlefield, the conflict has already distorted global production and distribution of petroleum products, leading to rising energy prices.
He explained that Iran, a prominent member of the OPEC, played a critical role in the Middle East political economy and controls strategic transport corridors vital to global trade.
The situation, he noted, had implications for the efficiency of international trade and the stability of global oil supply.
“Rising pump prices could continue to trigger a wider adjustment in the prices of goods and services, as energy costs typically have a multiplier effect on the broader economy.
“The instability in global oil supply is also increasing production costs across energy value chains, which ultimately reduces consumers’ purchasing power,’’ he said
Aliyu, however, said Nigeria could record increased oil revenues if crude prices remained above the benchmark contained in the country’s 2026 fiscal projections.
In spite of this potential windfall, the economic experts advise the Federal Government to prioritise advance domestic crude supply to local refineries at pre-war prices.
They recommend using additional oil revenues to stabilise the Forex market and cushion the economy against external shocks.
