Lekan Yusuf, Ibadan
In July 1967, the Nigerian Civil War saw the Nigerian army capture Bonny Island, an important oil terminal that helped the Nigerian government survive the war. The moment reminds us of an important truth that still characterizes the Nigerian state today.
Oil is not just an economic resource; rather, it is an important resource that defines the prosperity of the Nigerian state.
Today, some sixty years after the Nigerian independence, the lesson is still important.
The tensions that are developing globally are reminding us of the role that oil plays in the economies of the world.
The recent military intervention by the United States and Israel against Iran has seen the price of crude oil shoot up, leading the major economies of the world to draw from their strategic reserves
These developments offer Nigeria, the biggest producer of crude oil in Africa, both opportunities and risks. Because the nation exports crude, rising oil prices boost government income and foreign reserves.
Nigeria’s production increased from about 1.345 million barrels per day in 2024 to about 1.45 million barrels per day in early 2026 thanks to new wells and better anti-theft measures. National revenue can increase by about $14 million every day for every $10 increase in the price of oil globally.
Sustained prices above $100 – $150 per barrel could bring in billions more dollars, with the 2026 budget benchmarked at 65 dollars.
Nigeria’s situation is pretty strange. Even though it has loads of crude oil, the country still brings in a ton of refined fuel from abroad.
The Dangote Refinery is supposedly a game-changer with its massive 650,000 barrels-a-day capacity was meant to fix this. But when it started up in late 2024, it only managed about 18 million litres of petrol a day.
That’s not even close to the 35 million they expected, so imports kept rolling in, anywhere from 24 to 44 million litres daily.
And when global prices jump, Nigerians just end up paying more for transport and food.
Domestic instability also threatens production. Militancy, sabotage, and crude theft in the Niger Delta have repeatedly disrupted output.
In late 2025, attacks attributed to the Niger Delta Avengers reportedly reduced production significantly, allowing Angola to briefly overtake Nigeria as Africa’s leading producer.
Addressing these challenges requires two strategic priorities.
First is strengthening the entire oil value chain through secure pipelines, increased investment, and reliable domestic refining. Second is diversifying the wider economy.
Nigeria’s dependence on oil revenue has historically exposed it to global price shocks, making agriculture, manufacturing, and technology essential pillars for long-term stability.
Recent economic reforms introduced by Bola Ahmed Tinubu mark a significant shift in this direction.
In May 2023, the government removed the long-standing fuel subsidy that had cost billions of dollars annually.
Allowing petrol prices to reflect market conditions has reduced fiscal pressure and improved incentives for investment in domestic refining.
The new economic reforms that Bola Ahmed Tinubu has introduced are a change.
In May 2023, his government stopped the subsidy on fuel.
This was a help to the country because the government was spending a lot of money on fuel every year.
Now that the government is no longer paying to reduce fuel costs, the price of petrol reflects the market. This means the government has money to spend on other things, and it is a good opportunity for people who want to invest in oil refineries in Nigeria.
The administration also unified Nigeria’s exchange rate system, making it easier for oil companies and investors to transact and repatriate revenue. Although the reform initially weakened the naira, it improved transparency and strengthened the economics of local refining and petroleum production.
These reforms coincide with renewed focus on refining capacity. Alongside the Dangote Refinery, the rehabilitation of the Port Harcourt Refinery, Warri Refinery, and Kaduna Refinery could lift Nigeria’s combined refining potential to more than 1.09 million barrels per day.
If effectively implemented, Nigeria can move beyond the long-standing paradox of exporting crude while importing fuel.
Instead, it can emerge as a regional refining and petroleum export hub.
Global conflicts will continue to influence oil markets. Nigeria’s long-term prosperity will depend not only on producing oil but on managing it wisely. With sustained reforms, stronger refining capacity, and broader economic diversification, the country can turn its energy wealth into a foundation for resilience and sustainable growth.
