FDC chief says rising global crude prices could deepen insecurity, slash profits, and push Nigeria’s middle class into financial distress…..
Rising global oil prices may be boosting government revenues, but they are also creating powerful incentives for crude oil theft, worsening insecurity and putting fresh pressure on businesses and households, according to Bismarck Rewane.
The Chief Executive Officer of Financial Derivatives Company Limited made this known during his April 2026 presentation at the Lagos Business School Breakfast Session, where he delivered a stark assessment of the economic ripple effects of the ongoing global energy shock.
Rewane projected that as crude oil prices climb from $64 to $110 per barrel, illegal earnings from oil theft could surge by nearly 137% rising from about $3 million per day in January to as much as $16 million daily by April.
At the core of this trend is what he described as “creek economics”, a system in which higher oil prices significantly increase the profitability of illicit activities such as pipeline vandalism, bunkering, and crude diversion.
In January, an estimated 100,000 barrels per day were siphoned off and sold at heavily discounted prices, generating about $3 million daily. At that level, militants still had an incentive to engage in security contracts protecting oil infrastructure, valued at roughly $50 million per month.
But the equation has now changed.
With oil prices soaring, Rewane estimates that stolen volumes could double to 200,000 barrels per day, with crude sold at around $80 per barrel on the black market. That translates to roughly $16 million in daily revenue far exceeding what could be earned through legitimate security arrangements.
The implication, he warned, is clear: “Higher oil prices can worsen leakage and insecurity,” as illegal operations become far more lucrative than official contracts.
Beyond security risks, the broader economy is also feeling the strain.
Using a Nigerian brewery as a case study, Rewane illustrated how rising energy and input costs are eroding profitability across the manufacturing sector. Despite a modest increase in revenue, profits for the company are projected to fall sharply from N25.41 billion to N10.8 billion due to surging costs of diesel, logistics, raw materials, and foreign exchange pressures.
He noted that diesel prices have jumped by as much as 80 to 100 percent, compounding operational expenses and squeezing margins.
“Cost-push inflation will erode industrial margins quickly,” he said, warning that businesses are now facing tighter cash flow, rising inventory levels, and weakening consumer demand.
The impact extends to the wider economy. According to Rewane, disruptions linked to tensions around the Strait of Hormuz could shave Nigeria’s projected GDP growth from 3.8% to 3.2% in the first quarter of 2026.
He expects a chain reaction: declining real incomes, reduced consumption, stagnant investment, and potential job losses even as government revenues improve.
For households, the outlook is particularly grim.
Rewane painted a vivid picture of a middle-class professional in Lagos earning N1.2 million monthly. While such an individual could save N150,000 in January, rising living costs could push them into a monthly deficit of N110,000 by April.
Within weeks, discretionary spending would shrink. Within months, savings could be wiped out entirely, forcing reliance on credit and leading to cuts in food quality and social activities.
“The middle class becomes financially fragile,” he warned, as declining purchasing power feeds directly into slower economic growth.
Small businesses are also under pressure. Traders and SMEs, he said, could see profits drop by as much as 50% between January and April, as rising costs collide with weakening demand and slower inventory turnover.
At the government level, however, higher oil prices are providing some relief.
Using Kaduna State as an example, Rewane projected that monthly allocations from the federation account could rise from N28 billion to N40 billion, helping to reduce deficit spending and improve cash flow.
This could enable state governments to meet salary obligations more easily, invest in infrastructure, or even reintroduce short-term subsidies. But he cautioned that without careful management, such gains could be short-lived.
Inflationary pressures are also expected to persist. Rewane projected headline inflation at 15.85%, with food and core inflation close behind.
He warned that households could experience a 15–20% drop in real purchasing power as transport and energy costs push food and commodity prices up by as much as 30%.
Low-income families, already spending a large share of their income on basic needs, are likely to cut back further on essentials such as food and healthcare deepening both monetary and non-monetary poverty.
Ultimately, while Nigeria may benefit from higher oil revenues on paper, Rewane cautioned that the broader economic impact tells a more complicated story.
“Not all oil gains translate to national benefit,” he said, emphasizing that rising fuel costs act as a multiplier intensifying inequality, weakening businesses, and increasing economic vulnerability across the board.
