Introduction
Geopolitical and geoeconomic variables are converging strongly
on the likelihood of a repeat of the June 2025 military exchanges between Tehran
and Tel-Aviv. For many commentators it is a matter of when rather than if. Potential impact on global markets are noted. Given
that one of the priority variables at play is petroleum, the fulcrum of the global
economy by a huge margin, we are concerned with Nigeria’s situation. In this
scenario, our position isn’t claiming prescience that the conflict is certain or
suggesting accuracy of account, rather drawing from history attempt to extend meanings with geopolitical
implications as far as Nigeria and its citizens/residents are concerned.
The Setting
There are broad outlines of the
current global geopolitical configuration. These outlines began as
early as 1991 and the patterns, relationships and trends are reaching maturity.
From an intellectual viewpoint, those addicted to western worldview in
these matters should draw conclusions from facts on the ground especially with long
durée. Geopolitical transitions and change of hegemons are normal
geopolitical and civilisational realities.
At the moment United States military
assets are active in West Asia (via Israel), Venezuelan coast and the Black Sea
(via NATO). These are engagements of choice with limited geostrategic depth spectrum. Cost is the main variable in these investments because once peer-to-peer conflict go beyond a week and without compensatory inbound benefits, defeat can only be masked by propaganda. In each of the theatres, (control of) petroleum is the
major attraction despite US role as one of the biggest petroleum producers/importer
and petroleum products exporter.
In the last 3 years US has secured the EU LNG market by encouraging the latter’s severance of its strategic energy relations with Russia at painful costs. Similar geostrategy is playing out in Turkey with Ankara signing up to US LNG concomitant to reducing contracts with Iran and Russia respectively. US isn’t starved of markets because Washington DC imposed its will on satraps and vassals with ease.
As for Russia, despite shrinking
European market, it has consolidated new markets in Asia particularly China and
India. Her economic performance is an unvarnished testimony. Therefore in the global energy market US, Russia, China and India are the top players with sufficient import, export and refining capacities. Chinese massive
imports is enabled by pipelines that reduce dependence on sea-based imports with extra security provided by an ascending naval capability. Where does this leave small players?
Nigeria’s Regression
One can declare that Nigeria
is historically versed on conflict-induced petroleum windfalls during
1973 Arab-Israeli war and 1990 Gulf War I. Reminiscing one of its former
leaders, the issue is never resources but how to spend it. Despite these additional profit accumulations in the short term, Nigeria is bereft of stability, certainty and
genuine collective wellbeing. However a number of geopolitical variables give
Abuja renewed advantage. These include distance (from chokepoint and war theatres), low-sulphur petroleum and weak
currency.
These advantages kick
in once prospective conflict goes beyond 14 days. Correlation of forces between Israel
(US) and Iran is sharp nevertheless the mastery of the Red Sea by Yemen in the last 2 years is a factual deficit for the former. Unknown is the scope of ambiguity loaded on Tehran’s coordination
with Moscow and Beijing. It also possess a massive spirituality card of sacrifice mostly ignored by many commentators and analysts. From
the 3rd week, cost-inflation tactics by Tehran may include
closing the Gulf of Hormuz hitting Gulf states exports triggering global
knock-on effect.
This singular operation even
for a few days may hand Tehran a strategic edge for selective control of the
gulf. Mind you the Red Sea and the Gulf of Hormuz become shut for traffic. Naturally petroleum prices will rise sharply and customers particularly
from the African neighbourhood, Europe, Asia and South America proceed to Nigeria's Bight of Biafra. Huge commissions, grand profits and big bank balances in foreign
currencies will effect automatically devoid of capital control. Arguments will advance against based on the worn-out anti-inflationary
platitude. Then what?
Domestic Market and the Imperium
The current human resource
panorama in both public and private sectors have questionable applied leadership
competence to successfully oversee such precarious project in Nigeria. This is not borne of pessimism
rather an admission of legacy patterns locked in dismissal of implications of geostrategic
calculations. This means that the scenario will only be confronted when it
emerges. The political elite and structures have deep qualitative gaps open to
both abuse and genuine reform. Their rabbit-on-the headlamp attitude to all things western against national interest may play out with pavlovian distinction.
While new customers readily increase
petroleum purchase (with low insurance premium) mostly by short-term contracts and spot-market mechanism, there will be lack of production capacity to
accommodate such surge in demand. Nigeria upstream sector currently struggles to meet its OPEC
production quota. Similar situation is evident for storage where mediation of
strategic reserves remain as opaque as its apparent location in policy drafts. Profit will certainly accrue and accumulate parked in foreign accounts as foreign reserves which is normal for a country without an sovereign payment system.
The primary issue for the economy on the downstream sector is already taking place in the massive limit in refining capacity poorly augmented
by huge imports of select petroleum products. Quality issues plague many of the sold products multiplying consumer costs across the board. The booming generating set market is an indicator. Nigeria is a petroleum exporter and a big importer of refined products because of decades-long lack of investment in the 4 state-owned
refineries. The same petroleum products imports during the surge may suffer delays from bureaucratic lapses and profit-oriented
sabotage.
Therefore leveraging any
windfall will initially decline with cost of imports rising to inundate the apparently
bulging capital account. It is uncertain from history how post-conflict reality
will positively transform for production revitalisation, domestic market stability and increased refining capacity. Surges have narrow window and then expire for normal market trends and equilibrium to restore.
Having drawn one conclusion
from history, great prospects that ruptures Nigeria's past from the future remains. The big picture is certain on the aftermath irrespective of outcome which unveils a clear demarcation of US-led west from the world with Moscow, Beijing, Delhi and Tehran in the driver's seat. A new world order is coming. Nigeria's part in the new configuration doesn’t and shouldn’t depend on petroleum exports and conflicts, but on its people, the majority who presently groan for dignity and justice. This invites a reliable energy geostrategy with a healthy petroleum industry prioritising robust domestic market and sophisticated performance in the global markets.
Conclusion
There is no need for a new conflict anywhere to increase petroleum profits rather such will be a theoretical bonus with the potential to revitalise the concept of petroleum as a curse to Nigeria. However pregnant possibilities and opportunities in the global energy market in a post-Atlantic world are endless for new mechanisms to transform strategies and operations underpinning petroleum resource management. Federal government has priority card. Even in the face of climate change with its potential positive effects for state and people, there remains a potential for a critical mass of will necessary to exploit advantages domestically. A 3rd windfall in less than 100 years may either accelerate positive change or elevate regression to a whole new level probably unseen since 1861.
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