The battle against inflation by the Nigerian government was hit by a wave of global energy disruptions which reversed headline inflation that was on an upward trajectory, and it bowed by 15.93 per cent in May 2026.

This revelation is according to the newly released Meristem 2026 Half-Year Outlook, tagged “Stability Meets Uncertainty, Reprising Risks, Sustaining Growth,” which was officially released by Meristem on Wednesday.

The sudden reversal has been heavily tied to “Operation Epic Fury,” a 38-day joint United States-Israeli military campaign against Iran that commenced on 28 February 2026. The military action led to the effective closure of the critical Strait of Hormuz, triggering a massive global energy shock that drove Brent crude prices above $110 per barrel at its peak.

“The global oil shock trickled down into higher domestic fuel and transportation costs,” market analysts noted in the report, highlighting the swift transmission of international energy volatility into the local Nigerian economy.

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The inflationary pressure comes despite a strong macroeconomic showing elsewhere in the country. Nigeria’s Gross Domestic Product (GDP) expanded 3.89 percent year-on-year in the first quarter of 2026, marking its fastest Q1 growth pace in a decade.

This expansion was predominantly driven by vibrant non-oil sectors, including telecommunications and financial services. Furthermore, a surging trade surplus and robust portfolio inflows propelled Nigeria’s foreign reserves across the $50bn milestone in June, for the first time since 2009.

However, the domestic oil sector has struggled to capitalise fully on the high global prices. Maintenance activities at major facilities, such as the Bonga field, kept first-half crude production at a crawl. While output gradually recovered to 1.70 million barrels per day in May, it remained safely below the Federal Government’s budgetary benchmark of 1.84mbpd.

The resurgence of inflation in Nigeria mirrors a broader global trend, as central banks worldwide have been forced to pivot. The era of monetary easing has faced abrupt interruptions, with the European Central Bank and the Bank of Japan delivering surprise 25-basis-point rate hikes to combat energy-driven price hikes.

With central banks shifting to a “higher for longer” interest rate stance to contain these reignited inflation fears, the report notes that Nigerian policymakers face the delicate task of balancing robust domestic growth against compounding, energy-induced living costs in the second half of the year.

Nigeria faces a direct fiscal alarm bell in the third quarter (Q3) of 2026 as crude oil price dips below $80 per barrel amid fragile global stability, with the Society of Energy Editors (SEE) warning that oil below $80 would be a stress test the country’s economy cannot afford to misread.

In its Q3 2026 Energy & Extractives Outlook released Wednesday, SEE described the current global energy market as a “Tehran-Tel Aviv Paradox”.

The report projected that if crude oil remained below $80, the pump prices of petrol would oscillate between N750 and N850 per litre, depending on the exchange rate window.

It explained that the United States- Iran hostilities had paused, giving a temporary floor to prices, but that Israel’s sustained engagement in Lebanon was keeping a geopolitical risk premium alive.

For Nigeria, the report said the dip below $80 per barrel threatened budget benchmarks and exposed deep structural fragility across downstream, upstream, power, and mining sectors.

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It said the downstream sector entered Q3, 2026 at a crossroads, noting that domestic refining led by Dangote Refinery and the rehabilitated Port Harcourt facility was now running at improved capacity, strengthening the case for full deregulation.

However, SEE warned of a “growing paradox: operational autonomy without price freedom.”

It argued that while supply bottlenecks have eased, the pump prices of petrol have not decoupled from crude volatility.

“If Brent remains sub-$80, we anticipate a grudging, non-linear moderation in pump prices, potentially oscillating between N750 and N850 per litre depending on the exchange rate window,” the report stated.

The real flashpoint, SEE warned, would be the dollar-denominated cost within the domestic chain.

“We project a flashpoint between marketers insisting on mirroring import parity prices and regulators demanding volume over margin. The era of improved domestic refining is here, but the consumer is yet to feel the insulating benefits of a truly naira-based petroleum market”, it noted.

SEE projected that if security improved, oil production would consolidate around 1.75 million barrels per day, inclusive of condensates.

However, the report said new volumes would depend on brownfield infill drilling, not deepwater mega-projects, insisting that global capital was fleeing fossil fuels.

It stated that independent producers would increase production through short-cycle tie-backs under the Petroleum Industry Act’s (PIA) improved fiscal terms.

But the report argued that the additional output would be “insufficient to offset the structural decline in maturing basins unless security costs are tamed.”

The report noted that the bigger constraint was finance, stressing that the international commercial banks and development finance institutions were now pricing Nigerian upstream debt at a ‘Violence-Adjusted Cost of Capital’.

According to the report, the banks have projected that the cost of a five-year senior secured reserve-based lending facility for a Nigerian independent will hover between 12 and 15 per cent per annum in hard currency, “assuming it is available at all.”

With risk rising, SEE observed that indigenous players were being forced into “opaque, high-yield private credit funds or forced to pre-sell crude at steep discounts to commodity traders.”

SEE also flagged a security-investment doom loop, explaining that as oil prices dip, government revenue to fund surveillance contracts and the military Joint Task Force tightens.

“A liquidity crisis in the protective architecture, just as economic hardship on the waterways rises, is a recipe for a spike in illegal bunkering and sabotage”, the report said.

The group urged a shift from a kinetic model to a community-led, technology-driven “Pipeline Protection 2.0” framework co-financed by operators to insulate it from federal budget cycles.

The report, however, concluded that the oil below $80 was a manageable stress test, not a catastrophe, provided the macro-economic managers would treat it as a permanent shift rather than a transient dip.

“Q3 2026 will be defined by the tension between operational progress and financial fragility. The energy sector is supplying the molecules; the question remains whether the economic framework can absorb them. In mining, the question is even sharper: without territorial security, the subsurface remains a curse rather than a treasury”, it added.

Despite the global oil market tending to move in its favour, the Profit After Tax (PAT) of national oil major, the Nigerian National Petroleum Company Limited (NNPC Ltd) declined from the N481billion in April 2026 to N462 billion in May 2026.

This was detailed in its Monthly report Summary for May 2026.

In the month under review, the NNPC Ltd made N4.335 billion revenue, crashing from the N4.971trillion recorded in the preceding month.

According to the report, the NNPC Ltd paid N4.858 billion for six months statutorily into the federation account, January to May 2026, soaring from the N3.714 trillion paid till April 2026.
It added that 98 percent pipeline availability was recorded in the period under review.

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The report said, “From operational performance to strategic infrastructure delivery and community impact, we present to you some of the key highlights from NNPC Ltd.’s Monthly Report Summary for May 2026.

“The Report covers key performance indicators, including revenue of ₦4,335 billion, profit after tax of ₦462 billion, cumulative statutory payments of ₦4,858 billion for January to May 2026, 98% upstream pipeline availability, strategic operational initiatives, and many more.

“Together, these impressive figures reflect our continued focus on powering progress and delivering value across the energy value chain.”