Rising geopolitical tensions in the Middle East are rippling through global markets, driving oil price volatility and rekindling inflation concerns, which could reshape monetary policy decisions in Nigeria and beyond, market analysis suggests.

Analysts say the developments come at a delicate time, when inflation had only just begun to ease.

According to Senior Market Analyst for FXTM Africa, Matthew Anthony, the escalation of conflict has introduced fresh uncertainty into the global economic outlook.

“Tensions in the Middle East are sending shockwaves through global markets, stoking fresh inflation concerns as oil prices climb,” he said, warning that “mounting fears of inflationary shocks could force central banks to rethink their 2026 playbooks”.

Nigeria’s inflation rate had slowed to 15.06 per cent in February, offering cautious optimism to policymakers.

However, the recent surge in global oil prices has translated into higher domestic fuel costs, with gasoline prices rising by more than 30 per cent, Anthony said.

This has driven up transportation expenses, compounding cost-of-living pressures for households across the country.

Despite the headwinds, he noted, Nigeria’s position as Africa’s leading crude exporter has provided some buffer.

He noted how oil production gains have helped to stabilise external balances, while the naira has remained relatively steady, weakening just 0.3 per cent against the dollar in recent weeks.

The currency currently trades around N1,385 to the dollar, compared with N1,360 before tensions escalated, he recalled.

Anthony cautioned that the developments could complicate the Central Bank of Nigeria’s (CBN) policy trajectory.

“The shifts may challenge the CBN’s plans to keep lowering interest rates,” he noted, highlighting the difficult balancing act between supporting growth and containing inflation.

Globally, investor sentiment has turned cautious, with risk aversion returning to markets as the conflict deepens. Equity markets have come under pressure, while attention has shifted to critical supply routes such as the Strait of Hormuz.

Calls by former U.S. President Donald Trump for international efforts to secure the waterway have further underscored the strategic importance of the region.

Oil markets have been particularly volatile, with Brent crude surging above $103 per barrel amid fears of supply disruptions linked to attacks on energy infrastructure, he said.

Although the International Energy Agency (IEA) has released 400 million barrels from emergency reserves, while the United States has issued temporary waivers for Russian oil purchases, prices have remained elevated, supported by persistent geopolitical risks.

“Ultimately, this has injected oil prices with monstrous levels of volatility,” Anthony said, adding that prices could extend gains if tensions persist.