Nigerian firms see relief as easing Middle East crisis cuts oil prices

The easing of geopolitical tensions in the Middle East and the fall in global crude oil prices have brightened the outlook for Nigerian businesses, with companies betting that lower energy costs will ease operating expenses after months of grappling with inflation and high production costs.

The Nigerian Economic Summit Group (NESG) Future Business Expectations Index rose to 128.4 points in June from 127.0 points in May, reflecting stronger confidence among firms that business conditions will improve over the next one to three months.

The report attributed much of the improved sentiment to easing geopolitical tensions in the Middle East, which pushed average global oil prices down to $87.7 per barrel in June from $112 per barrel in May.

“The generally positive outlook was partly shaped by expectations of lower energy costs as geopolitical tensions in the Middle East have eased,” the report said.

The optimism comes as Nigerian businesses continue to struggle with elevated operating costs despite signs that macroeconomic conditions are gradually stabilising.

According to the report, firms continue to face limited access to finance, erratic electricity supply, rising rental costs, insecurity, supply chain bottlenecks, and high input prices, all of which constrained business activity during June.

Even so, Nigeria’s business environment remained in expansion territory for the sixth consecutive month this year.

The Current Business Performance Index stood at 104.6 points in June, unchanged from May, indicating continued expansion in private sector activity. However, the reading was significantly lower than the 113.6 points recorded in June 2025, suggesting that the pace of growth has moderated over the past year.

Manufacturing and trade remained the key drivers of expansion, although both sectors grew at a slower pace than in the previous month. Agriculture and non-manufacturing also returned to expansion, while the services sector slipped into contraction.

Several key business indicators, including production, demand conditions, operating profits, financial performance, supply orders, employment, cash flow, and access to credit, remained above the expansion threshold, with more than half improving from May levels.

However, investment activity remained weak, exports stayed subdued, and firms cut back on stockpiling, reflecting continued caution about the broader economic environment.

Trade companies expressed the strongest optimism for the coming months, recording a future expectations index of 174.6 points, followed by manufacturing at 166.0 points. Non-manufacturing businesses posted 142.8 points, while agriculture (127.4 points) and services (112.7 points) were comparatively less optimistic.

“While Nigeria’s private sector has shown resilience by remaining in expansion territory throughout the first half of 2026, sustaining that momentum will depend on addressing structural challenges such as access to affordable finance, reliable electricity supply, insecurity, and the high cost of doing business,” the report disclosed.