The World Bank has warned that Nigeria could face a fresh surge in inflation as rising global oil prices continue to exert pressure on the economy.
Inflation Projections
In its latest Nigeria Development Update released in Abuja, the bank projected that higher crude oil prices could add about 3.1 percentage points to Nigeria’s headline inflation, particularly if the impact is fully transmitted across the economy.
Downstream Petroleum Sector Distortions
The report identified distortions in the downstream petroleum sector as a major driver of inflationary pressure, pointing to the widening gap between locally refined petrol and imported fuel. According to the bank, imported petrol is currently about 12 per cent cheaper than fuel supplied by the Dangote Petroleum Refinery.
It noted that the refinery, now the dominant supplier of refined petrol following the halt in import licences in early 2026, raised its ex-depot price of Premium Motor Spirit to about N1,275 per litre as of March 23, 2026. This compares to an estimated import-parity price of around N1,122 per litre, creating a price differential of roughly 12 per cent.
Global Energy Market Pressures
The World Bank linked these developments to broader global energy market pressures, particularly the ongoing Middle East conflict, which has driven crude oil prices upward. It warned that a rise in oil prices to about $80 per barrel, representing a 31.1 per cent increase from pre-conflict levels, would significantly worsen inflation.
“Overall, an increase in oil prices to about $80 per barrel would directly add around 3.1 percentage points to headline inflation under a full pass-through assumption,” the report stated.
Secondary Inflationary Effects
Beyond the direct impact, the bank cautioned that higher fuel costs would also trigger secondary inflationary effects. Increased transport and logistics expenses are expected to push up the cost of goods and services, especially food.
Energy-related components, including transport, account for about 10.1 per cent of Nigeria’s Consumer Price Index basket, meaning fuel price shocks quickly feed into overall inflation.
Food and Fertiliser Price Risks
The report further warned that global tensions could elevate food and fertiliser prices, compounding domestic inflationary pressures and deepening the cost-of-living challenge for Nigerians.
