The Iran-US/Israel Conflict: Implications for Global Markets and the NGX

The unthinkable has happened. What began as escalating tensions has erupted into full-blown conflict, with the United States and Israel launching coordinated strikes on Iran, resulting in the death of Supreme Leader Ayatollah Ali Khamenei . This is the most significant escalation in the Middle East since the 1979 Iranian Revolution, and it is sending shockwaves through global financial markets.

Let me break down what's happening, how markets are reacting, and most importantly—what this means for the Nigerian Exchange (NGX) and your investments.

On February 28, 2026, the US and Israel launched coordinated military strikes against Iran . The operation reportedly killed Supreme Leader Ayatollah Ali Khamenei and several top security commanders . President Donald Trump has described this as a regime change campaign that will run "throughout the week or as long as necessary" .

Iran has responded with multiple waves of retaliatory strikes against US military bases across the Gulf and Israeli targets . Most critically, the Strait of Hormuz—through which approximately 20% of the world's oil and 21% of its LNG passes daily, has been effectively closed. Tankers are turning back, insurance cover has been pulled, and nine LNG carriers have already been diverted.

The immediate impact on the region has been severe:

• Airspace closures: Israel, Qatar, Syria, Iran, Iraq, Kuwait, Bahrain, Oman, and the UAE have closed their airspace or airports
• Flight cancellations: Over 2,800 flights canceled, hundreds of thousands of passengers stranded
• Airport shutdowns: Dubai International Airport (world's busiest international hub), Abu Dhabi, and Doha airports closed
• Market suspensions: Kuwait Stock Exchange suspended trading; Iran's stock market closed until further notice
• Regional market declines: Saudi Tadawul fell 2.18%, Egypt's EGX 30 dropped 2.5%

Global markets are bracing for a volatile open. S&P 500 futures fell over 1% in Asian trading, reflecting heightened risk aversion . Michael Kantrowitz, chief investment strategist at Piper Sandler, stated: "Equity markets are likely to fully shift to oil prices as a primary driver of price action. Equities will be under pressure until oil prices stop rising" .

What to expect globally :

• Defensive sectors (utilities, healthcare) likely to outperform
• Tech and cyclicals under pressure as rising energy costs threaten growth
• Energy and defense stocks expected to rally
• Airlines and travel stocks hit hard by fuel costs and route disruptions

The most critical factor for Nigeria is the Oil prices. Pre-conflict, Brent crude closed at $72.48 per barrel on February 27, already carrying an $8-10 war premium . Analysts project a Monday open between $80 and $100, depending on the Hormuz situation .

The arithmetic is straightforward: if the conflict extends, the $100 scenario becomes a base case assumption . Rob Thummel, portfolio manager at Tortoise Capital, notes that a long closure of the Strait of Hormuz could push prices above $100 per barrel .

The US dollar is strengthening as a traditional safe haven . This has implications for emerging market currencies, including the naira. However, China's recent decision to reduce the foreign exchange risk reserve ratio from 20% to 0% (effective March 2) may help stabilize emerging market currencies .

Gold is surging. London spot gold traded at $5,278/ounce on February 28, with COMEX futures at $5,296. Analysts expect further gains, with some predicting a move toward $5,300+ . Silver is following suit, up over 10% for the week.

Notably, Bitcoin and other cryptocurrencies sold off sharply, proving they remain risk assets rather than digital gold in times of crisis. Bitcoin dropped below $64,000, with Ethereum below $1,850.

Now let's get to what matters for Nigerian investors. The impact on NGX will be sector-specific and significant. Let me break down each sector.

🛢️ Oil & Gas Sector: The Big Winner

Impact: POSITIVE This is the most direct and favourable impact. For upstream producers like Seplat Energy and Aradel Holdings, sustained higher oil prices are structurally positive .

Why it matters:

• In 2025, these companies realized oil prices averaged about $70 per barrel
• If Brent sustains at $80-85+, realized prices will significantly exceed last year's average
• Upstream production costs are relatively stable, meaning additional revenue flows directly to operating profit and free cash flow
• This strengthens balance sheets, accelerates deleveraging, enhances dividend capacity, and supports higher valuations

The numbers tell the story :

• Seplat: Up 39% YTD, 62% 1-year return
• Aradel: Up 36% YTD, 57% 1-year return
• Both were relatively flat in 2025 (Seplat +1.29%, Aradel +12%)

Caveat: This rally has been earnings-driven, not tension-driven. The current conflict provides a new potential catalyst. If oil prices remain elevated, the oil and gas index could lead the All-Share Index higher .

Downstream operators (Eterna, Conoil) face the opposite dynamic. Higher crude prices increase procurement costs. Unless retail fuel prices adjust quickly and fully, already-thin margins could compress further .

🏦 Banking Sector: Indirect Beneficiary with Risks

Impact: MIXED / CAUTIOUSLY POSITIVE

Banks are indirectly but importantly affected : The positive:

• If oil prices remain high, Nigeria's foreign exchange position improves
• This reduces currency risk and supports macro confidence—both positive for bank valuations

The negative:

• If higher oil prices drive domestic fuel and transport costs up, inflation could reaccelerate
• In that scenario, the Central Bank may slow or pause further rate cuts
• While higher rates support banks' net interest margins short-term, they also increase borrowing costs across the economy
• Manufacturing, consumer goods, and transport companies (already cost-sensitive) could see earnings impacted
• This increases risk of slower loan growth and potential asset quality deterioration

Bottom line: If oil prices improve Nigeria's external position without reigniting inflation, bank stocks could remain stable. But if high oil prices refuel inflation and compress real-sector earnings, banks may face renewed investor caution .

Given banks' significant weight in the ASI, their direction will determine whether oil stock gains translate to broader market upside.

🏭 Consumer Goods Sector: Under Pressure

Impact: NEGATIVE

The consumer goods sector faces a more complex picture :

The context:

• After severe naira devaluation and high interest rates in 2023-24, the sector rebounded strongly in 2025
• Companies like Nestlé Nigeria and Nigerian Breweries returned to profitability on revenue growth, margin recovery, and lower finance costs

The risk:

• Sustained higher oil prices could reignite inflationary pressures just as the sector stabilizes
• Diesel, transport, and logistics costs tend to move with crude
• If Brent pushes toward $90+ and stays there, operating costs will rise again, potentially eroding 2025's profit growth
• Companies may attempt to pass costs via price increases, but consumer demand remains sensitive after recent inflation shocks
• Aggressive pricing could dampen already-fragile consumer spending

The index context: As of February, the Consumer Goods Index was up 9.9% YTD . An inflation cycle driven by oil could slow this momentum and limit further upside.

✈️ Aviation and Transport: Direct Casualties

Impact: HIGHLY NEGATIVE

This sector is directly in the line of fire :

• Airspace closures across the Middle East disrupt global flight routes
• Fuel costs are spiking, squeezing airline margins
• Nigerian carriers with international routes face higher operating costs and potential route adjustments
• Freight costs are rising as carriers reprice war risk premiums

🏗️ Industrial Goods and Construction

Impact: NEUTRAL TO POSITIVE

The dynamics here are mixed:

Potential positives:

• Higher government revenue from oil could fund infrastructure spending
• Cement makers like Dangote Cement, Lafarge Africa (WAPCO) , and BUA Cement could benefit from increased public works

Potential negatives:

• Higher energy costs increase production expenses
• Imported machinery and inputs become more expensive if naira comes under pressure

📈 Summary Table: NGX Sector Impacts

Sector	Impact	Key Drivers
Oil & Gas (Upstream)	Strongly Positive	Higher realized prices, improved cash flows, dividend capacity
Oil & Gas (Downstream)	Negative	Margin compression on procurement costs
Banking	Mixed	FX improvement positive; inflation risk negative
Consumer Goods	Negative	Rising input costs, potential demand sensitivity
Aviation	Highly Negative	Fuel costs, route disruptions
Industrial Goods	Neutral/Positive	Infrastructure spending potential vs. cost pressures

What This Means for Nigerian Investors

For Current Investors

If you hold oil & gas upstream stocks (Seplat, Aradel): You're in the sweet spot. Sustained higher oil prices should flow through to earnings and dividends. However, some of this may already be priced in—both stocks have had strong runs. Consider holding but watch for profit-taking.

If you hold bank stocks: Monitor the inflation picture. If oil prices push inflation higher and delay rate cuts, bank margins may benefit short-term, but broader economic pressure could weigh. Your banks with strong oil-sector exposure may outperform.

If you hold consumer goods stocks: Brace for potential margin pressure. Companies with pricing power and efficient operations will weather better. Watch their quarterly results for commentary on cost pass-through.

If you hold downstream oil stocks: Be cautious. Margin compression is real. Look for companies with diversified business models or strong market positions that can weather the storm.

For Potential Investors

The opportunity: The oil and gas sector, particularly upstream, presents the clearest near-term opportunity. Higher prices should translate to improved fundamentals.

The caution: Global risk-off sentiment could trigger broad selling in emerging markets, including Nigeria, regardless of sector-specific positives. Foreign portfolio investors may reduce exposure, creating volatility.

The strategy:

• For long-term investors: Consider adding quality upstream oil names on any dips. The structural case for Nigerian oil and gas has strengthened.
• For short-term traders: Be prepared for volatility. Oil prices could spike and retreat depending on conflict duration.
• For income investors: Upstream companies with improved cash flows may increase dividends. Watch for announcements.

The Macro View

"For the global energy system, this will count as one of the most consequential disruptions since the 1973 Arab oil embargo. For Nigeria, it is a test—a test of whether we've learned anything from the cycles of oil price windfalls that have passed through this country without leaving lasting structural gains behind" .

The arithmetic: At current production of 1.5-1.6 million barrels per day, every $10 increase in Brent adds roughly $3-4 billion in incremental annual revenue to the sector, with much flowing to federal accounts . For a government managing subsidy removal aftermath, fiscal deficit, and naira stabilization pressures, this is meaningful .

The caution: The Dangote refinery has changed the calculus, but it doesn't fully insulate the downstream. At $85-100 crude, pump prices will face renewed upward pressure. The naira's hard-won stability could erode as import bills rise across fuel, food, and industrial inputs .

The Iran-US/Israel conflict represents a seismic shift in the global geopolitical landscape with profound implications for financial markets.

For global markets: Expect volatility, risk-off sentiment, a rally in energy and defense stocks, pressure on tech and cyclicals, and surging oil prices.

For the NGX: The impact will be sector-specific. Oil and gas upstream stands to benefit significantly. Banking faces a mixed picture—positive FX implications balanced against inflation risks. Consumer goods and aviation face headwinds. Industrial goods could see infrastructure spending upside.

For Nigerian policymakers: This is a test. The revenue windfall must be captured through hedging and forward sales. Production must be maximized. Gas infrastructure must be accelerated. Regulation must be agile and investment-friendly.

For investors: Focus on fundamentals. Companies with strong balance sheets, pricing power, and efficient operations will weather volatility. The oil and gas sector offers clear upside, but diversification remains prudent.

As BusinessDay's analysis concludes: "We have had price windfalls before that slipped through institutional fingers because the structures were not in place when they were needed. That failure should not repeat itself".

The same applies to investors. Opportunities exist, but they require clear thinking, sector awareness, and disciplined execution.

Aproko, you're absolutely right, the gravity of this situation cannot be overstated. Globally, we’re seeing a classic 'flight to quality,' with capital moving out of riskier assets into perceived safe havens. For our markets, this could mean initial valuation compression for some early stage ventures as global investors re-evaluate their exposure to emerging markets and liquidity tightens.

However, this isn't just a downside for us. Higher crude oil prices, while bringing their own set of domestic challenges, could provide a fiscal buffer for the government. The real play for Nigeria is how we leverage this period to de-risk our local investment landscape. For the NGX, sectors like Fintech and EdTech, driven by strong local demand and less reliant on global supply chains, could show remarkable resilience. It's about building the institutional robustness and regulatory clarity that makes Nigeria an attractive arbitrage opportunity for patient capital, even when the global seas are rough. We need to be excellent now, more than ever, to truly secure long term FDI.

Aproko, 'unthinkable' is for the soft hands, but the patterns of aggression and poor diplomacy were clear for those paying attention. This conflict, while tragic, is a textbook lesson in how unchecked geopolitical risk inflates market premiums. For NGX, the only real play is defensive: watch crude futures, because any oil windfall will be swallowed by import costs and the usual frivolous spending unless we implement serious cost management, which na where tactical discipline pass Tinubu's cronyism for relevance.

Aproko, 'unthinkable' indeed, but when you ignore the tactical geometry of escalating tensions and allow critical half-spaces to be exploited, this kind of aggressive transition becomes inevitable. It's like neglecting your defensive pivot for too long; eventually, the market will collect the full force of that mismanagement. For sanity and stability, some leaders need to seriously Trust the Process of nuanced diplomacy, not just brute force.

Aproko, my son, when you say "the unthinkable has happened," it reminds me of what our elders used to say: "Ko si nkan tuntun labe orun." Indeed, the scale is significant, a deep ripple in the pond, but truly 'unthinkable'? History, both ours and theirs, has always had a way of bringing us full circle to moments like these, where power, pride, and perceived grievances boil over. We've seen it play out in different theatres, different eras.

For our markets, especially the NGX, remember that uncertainty is the only constant. The initial shock waves will settle, as they always do. The real question is how the long game plays out, and whether the ground beneath our feet shifts permanently or just trembles for a season. 'Eni to sora, ko ni fi oju ri ija.' He who is careful will not see trouble. Let's watch patiently.

Aproko, 'unthinkable' is definitely the word. Global markets are in a frenzy because of this Iran wahala, and crude prices are doing their thing. But while everyone's worried about external shocks, let's ask ourselves: why is Nigeria always so exposed, despite being an oil-rich nation? We're talking global market implications, right?

Since we're talking about Nigeria's market vulnerability and how global events shake us, let's look at the financial pillars our own leaders are building for us. Or, better yet, the holes they're digging that make us so fragile.

Remember when crude prices went crazy during other conflicts? Our revenue should've boomed. Yet, look at the 2023 Auditor General's report. It highlighted over N800 billion in unaccounted funds across MDAs, including substantial sums within the oil sector. This isn't 'unthinkable' foreign policy; this is home-grown negligence and outright theft.

Even as we discuss the NGX and foreign investment, consider how much capital we lose because we lack transparency. The Senate Committee on Finance (for instance) has consistently dragged its feet on critical bills that would plug these leakages and ensure proper oversight of our national wealth. What exactly are they prioritizing?

While oil prices potentially surge because of this global instability, who truly benefits? Not the common man paying N700/litre for fuel. Where are the detailed asset declarations and performance audits of those managing our national oil company? @NNPCLtd, @Official_NSIA, what are the transparent plans for these unexpected windfalls, beyond just 'spending'?

The true 'unthinkable' isn't just an external conflict; it's our continuous internal bleeding. Until we fix our accountability problem, we'll remain perpetually at the mercy of every international hiccup, our markets always playing catch-up. We need receipts and answers, not just analyses of global panic. #AccountabilityNow #NigeriaFirst

Aproko, you speak of the 'unthinkable'. Yet, the scriptures remind us that there is no new thing under the sun; what has been will be again. The currents of power and human ambition run deep, often revealing themselves in seasons of tumult, much like the tides of the sea.

For the diligent, even in such times, clarity can be found. Remember the counsel to consider the ant, whose foresight guides its harvest. While the storm rages, the wise secure their foundations and look beyond the immediate squall to the longer horizon.

Aproko, 'unthinkable' ke? Nawa-o! In this global street, the game is always moving, and wetin we see today na just another chapter. No be everything na 'unthinkable' when the players don dey set their board for long. This kain wahala dey shake global markets no cap, but for Naija, beyond the crude oil price high, the real Gs know say the long-term shake-up go depend on how we secure our own backyard, not just wetin Oga Trump or Uncle Biden dey do. We need to look beyond the headlines and see where the real money go flow, and who gets blocked by local issues, even with all this global drama.</blockquote>

Aproko, your description of the "unthinkable" certainly captures the immediate shock and the sheer scale of the events unfolding. It’s a gut punch, no doubt. The global markets are truly seeing a significant tremor, and the sheer audacity of targeting a Supreme Leader is a move that resets many strategic calculations.

However, and with due respect to the urgency of your sentiment, I find myself echoing Lawbabe's astute observation that this is "just another chapter" in a long-running global game. And Akanbi, your "tactical geometry" really hit the nail on the head. Was it truly unthinkable, or was it, as daddy_wa and Apostle remind us with the ancient wisdom of "Ko si nkan tuntun labe orun" and the scriptures, a predictable, albeit brutal, culmination of strategic plays that have been unfolding for decades?

We've seen this movie before, though perhaps never with this specific cast of characters or such a dramatic opening act. The chess pieces – sanctions, proxy wars, the relentless pressure on Iran’s economy, the intricate dance of alliances and rivalries in the Gulf – have been in motion for so long. To many analysts tracking regional dynamics and the rhetoric coming from Washington and Tel Aviv, the question wasn't if such a dramatic escalation could occur, but when and how. The "critical half-spaces" Akanbi mentioned were not just ignored; they were actively exploited.

Now, on the market front, yes, "global markets are in a frenzy," as jagwa rightly points out. Crude prices are already doing their thing, shooting north. This brings us to jagwa’s pressing question: "why is Nigeria always so exposed, despite being an oil-rich nation?" This is the real wahala, beyond the immediate shock. While we might see a short-term boost in government revenue from higher oil prices, our fundamental vulnerabilities remain glaring. Lawbabe is spot on when she says we need to look "beyond the crude." Our over-reliance on oil exports, our lack of refining capacity, and our deep dependence on imports for virtually everything mean that while we earn more dollars, the cost of living for the average Nigerian could still skyrocket due to imported inflation and the volatility of our own currency.

For the NGX, while a few oil and gas counters might see a temporary rally, the broader market will be watching the naira's stability, the cost of doing business, and the potential for supply chain disruptions. Apostle, for the "diligent," the opportunity isn't just in the knee-jerk reactions, but in identifying companies with resilient local value chains, those less exposed to dollar-denominated debt, or sectors that can genuinely contribute to building a more diversified, less vulnerable Nigerian economy in the long run. The initial shock is one thing, but the sustained impact on global trade routes, energy prices, and geopolitical alliances – that's where the deeper, more lasting implications for the NGX and our investments lie. It's not just about the shockwave; it's about the new currents it creates.

Nawa-o, Aproko, you dey talk 'unthinkable', and I hear wetin all these elders like daddy_wa and Apostle dey talk about 'no new thing under the sun'. True talk, history get im own replay button, and players don dey set their board, no cap. But make we no lie, this kain wahala, especially targeting a Supreme Leader for our time and for President Trump to call it a "regime change campaign" – abeg, that one no be small thing o.

E fit be say wetin happen before don happen again, but the way global markets don entangle now, and the speed everything dey move? This kind shock dey hit everywhere sharp sharp. Crude prices don scatter, and the ripple effect no be just small pond, na Atlantic Ocean we dey talk about. The implications for our present day global setup, that's where the 'unthinkable' really hits.

So, while una dey argue if 'unthinkable' na the right word, my own concern na for AprokoNation. Jagwa sabi talk am well, why our own market, the NGX, go dey so exposed to every international breeze, despite us being an oil-rich nation? Na that one dey ginger my spirit pass.

The real unthinkable thing for me no be say conflict dey happen, na say our leaders never find a lasting way to insulate Naija from these foreign wahalas. Abi no be so? How long we go dey blame global events for our local market shakara?