The World Bank has warned that rising global oil prices could significantly worsen Nigeria’s inflation crisis, projecting that the surge may add about 3.1 percentage points to the country’s headline inflation rate if fuel price increases fully pass through the economy.
The warning was contained in the bank’s latest Nigeria Development Update released in Abuja on Tuesday.
According to the report, the widening gap between the cost of locally refined petrol and imported fuel is already intensifying inflationary pressure across the economy.
The bank revealed that petrol produced by the Dangote Petroleum Refinery currently costs around 12 percent more than imported fuel, creating distortions in Nigeria’s downstream oil market.
The report noted that the refinery—now the main supplier of petrol in Nigeria after regulators stopped issuing import licences earlier in 2026— recently raised its ex-depot price of Premium Motor Spirit (PMS) to about ₦1,275 per litre as of March 23, 2026.
By comparison, the estimated import parity price stands at ₦1,122 per litre, highlighting a significant pricing gap.
The World Bank said the situation reflects broader global energy pressures triggered by tensions in the Middle East, which have pushed crude oil prices sharply upward.
According to the bank, global oil prices could climb to about $80 per barrel, representing a 31.1 percent increase compared to pre-conflict levels.
Such a spike, the report said, would directly increase Nigeria’s inflation by 3.1 percentage points, while indirect effects—such as higher transportation, logistics, and food costs—could push prices even further.
Energy-related components like transport account for about 10.1 percent of Nigeria’s Consumer Price Index, meaning fuel price increases quickly ripple through the entire economy.
The report also warned that rising global food and fertiliser prices could compound the situation, putting additional pressure on domestic food costs.
Speaking at the launch of the report, the World Bank’s Country Director for Nigeria, Mathew Verghis, said Nigeria’s macroeconomic outlook has improved due to reforms introduced since 2023.
However, he warned that external shocks could derail progress.
According to Verghis, higher global energy prices and increased shipping costs are already driving up domestic fuel prices.
Diesel prices, he noted, have almost doubled by the end of March, while petrol prices have also risen sharply.
“These pressures will continue to feed into food and other prices,” he said.
Verghis stressed that reducing inflation remains the fastest way for Nigerians to feel the benefits of economic reforms, noting that even inflation at 15 percent significantly erodes purchasing power.
Despite inflation concerns, the World Bank said Nigeria’s economy remains resilient.
Lead economist for Nigeria at the World Bank, Fiseha Haile, projected that the country’s economy could grow by about 4.2 percent between 2026 and 2028.
Haile also pointed to improvements in Nigeria’s external sector, noting that foreign reserves have increased while exchange rate volatility has declined following the unification of the currency system.
However, he warned that weaker capital inflows and tighter global financial conditions could pose risks going forward.
Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said reforms implemented in recent years have strengthened the country’s ability to withstand external shocks.
According to him, Nigeria still has adequate fuel supply despite higher prices.
He also revealed that crude oil production has increased to about 1.4 million barrels per day, which could help boost government revenues amid rising global oil prices.
Meanwhile, the Central Bank of Nigeria says it remains focused on stabilising inflation and the exchange rate.
Deputy Governor for Economic Policy at the apex bank, Muhammad Abdullahi, described inflation as the biggest tax on the poor,” stressing that the bank is working to bring price growth under control.
The report also emphasized the importance of early childhood development as a long-term strategy for boosting productivity and national prosperity.
Experts warned that failing to invest in children’s health, nutrition, and education could reduce future economic output and limit income potential for millions of Nigerians.
