Conflict in the Middle East and Its Impact on Our Financial Situation, by Adekunle Adekoya

The United States, in collaboration with Israel, has been conducting aerial bombardments targeting Iran's military and defense infrastructure, resulting in the death of Ayatollah Ali Khamenei, the country's leader.

The conflict has led to a surge in crude oil prices in the international market, affecting Nigeria's economy, with petrol prices increasing by N450 to N600 at the pump, depending on the location within the country.

The distance between Nigeria and the conflict zone is significant, with Abuja, the capital, being approximately 5,352 km away by air, and Lagos, the commercial capital, being around 5,861 km away from Teheran by air.

The conflict's impact on Nigeria is a testament to the interconnectedness of the world, with the closure of the Straits of Hormuz, through which 20% of global crude shipping passes, causing oil prices to rise due to increased shipping costs and insurance.

Nigeria's lack of a functioning refinery has exacerbated the issue, with the country relying on imports, and the Dangote Refinery, which has a capacity of 650,000 bpd, only receiving five of the 12 cargoes of crude it needs locally.

The remaining seven cargoes are imported, and crude is sold to Dangote Refinery in Naira at dollar prices, with the current price of Bonny Light Crude being US$90.82 in the global market.

The cost of crude is further impacted by prevailing forex rates, and there should be price differentiation for local refiners, as the crude is being refined for domestic consumption.

The NNPC receives 445,000 barrels per day for domestic consumption, but this allocation is often sold in the global market and used to import refined products, rather than being refined locally.

The value of this crude allocation is now being used to pay the salaries of workers at non-functional refineries, highlighting the need for a functional refinery to mitigate the impact of the conflict on Nigeria's economy.

Government revenue may increase with rising crude prices, but this comes at the expense of the general population, who are forced to pay higher prices for petrol, with some paying as much as N2,500-N3,000 per litre.

The situation requires urgent attention, and Nigerians can only hope that the conflict ends soon, and normalcy is restored, to prevent further economic erosion and hardship.