Middle-East Crisis: How Tinubu’s policy of naira-for-crude guarantees supply security in Nigeria

Tope

By Temitope Ajayi

President Bola Tinubu demonstrated foresight in July 2024, when he approved the use of the naira as the payment currency for crude oil supplied by the NNPC to the Dangote Refinery. Since the launch of the naira-for-crude initiative on October 1, 2024, Nigeria has experienced a strategic breakthrough amid the ongoing economic turmoil resulting from the Iran-Israel-US conflict in the Middle East.

Since its inception, the technical committee on naira-for-crude, which has the Minister of Finance and Coordinating Minister of the Economy, Wale Edun and Executive Chairman of the Nigerian Revenue Service, Zacch Adedeji and others as members, the Federal government has developed a robust framework that has ensured the Presidential initiative continues to deliver on its core objectives by maintaining supply security, stabilising the economy, and safeguarding Nigeria’s energy future.

The US/Israel-Iran war has now entered its 6th week, triggering global economic chaos. With no immediate end in sight, the conflict has been exacerbated by Iran’s closure of the Strait of Hormuz, an important maritime corridor between the Persian Gulf and the Gulf of Oman, that accounts for over 20% of global oil and gas flows. The disruption of this vital waterway has sent shockwaves through energy markets worldwide.

Across Europe, the United States, Asia, Africa, and the Middle East, prices for LPG, LNG, PMS, and diesel have skyrocketed, placing enormous pressure on households and governments alike. The rising costs of energy have intensified economic strain on many nations, especially those with limited resources, where transportation and basic goods are becoming increasingly unaffordable.