Nigeria’s fuel, fertilizer, and food prices feel the strain of the Iran conflict
Nigeria is once again under economic pressure from a shock that originated far from its borders, as it faces high global fuel and fertilizer prices triggered by the closure of the Strait of Hormuz.
- Nigeria
- fuel
- fertilizers
- energy prices
- farm inputs
By Oliver Kiptoo Kirui, Adetunji Fasoranti, Temilolu Bamiwuye, Bedru Balana, Joseph Glauber, Charlotte Hebebrand, and Steven Were Omamo
Nigeria is once again under economic pressure from a shock that originated far from its borders, as it faces high global fuel and fertilizer prices triggered by the closure of the Strait of Hormuz. For a country still recovering from the inflationary aftermath of the Russia-Ukraine war, the timing could hardly be worse. The shock is reaching Nigeria through three tightly linked channels, fuel, fertilizer, and food, and it threatens to reverse a hard-won decline in food inflation.
Yet Nigeria also benefits from the fuel and fertilizer price spikes, which sets it apart from a simple winner-or-loser story. As an oil producer with rapidly expanding domestic refining and urea capacity, the country stands to gain from higher export earnings. IFPRI Food Policy Model simulations, outlined in a new Policy Note, suggest Nigeria could even see net welfare gains where increased oil and fertilizer export revenues outweigh rising domestic prices. However, the situation is complicated: the economy still depends heavily on imported refined fuel and on imported potash, phosphate, and other fertilizer inputs.
That dual exposure makes Nigeria’s potential policy response to the crisis both a delicate and consequential challenge.