Analyst urges FG to establish strategic petroleum reserve authority amid escalating Iran war

Energy analysts are raising alarm over Nigeria’s total lack of crude oil reserves as the Gulf War between the United States, Israel, and Iran enters its third week, driving global energy prices to historic highs.

Speaking on Arise News, Kelvin Emmanuel, an oil and gas expert and Managing Partner at Energy Consulting Practice, warned that Nigeria is currently reactive and missing a critical opportunity to hedge against the volatility that has seen domestic petrol prices soar above ₦1,100 per liter.

Emmanuel revealed that as of March 2026, Nigeria does not possess a single barrel of strategic crude reserves dedicated to national emergencies.

While terminals hold crude for immediate export or those already tied to forward sale agreements and debt financing, the government lacks a secondary stock to release during global supply shocks.

This absence of a buffer has left the domestic market vulnerable, with insurance premiums for shipping including war risk and hull machinery insurance rising four times over the past month.

To address this structural vulnerability, Emmanuel is calling on the National Assembly to enact a bill establishing the Strategic Petroleum Reserve Authority (SPRA).

This proposed body would manage both domestic and international crude stocks, allowing Nigeria to sell when prices are high and buy when prices are low.

He suggested funding this reserve through an "SPR Levy" of 0.5% to 1% on daily production from joint venture partners, or by collapsing the long-dormant Excess Crude Account into the new authority.

The urgency of this reform is underscored by the current military situation in the Middle East.

With the U.S. Navy reportedly targeting Iran’s Kharg Island which handles 90% of Iranian crude exports—and Iran threatening to block the Strait of Hormuz, analysts fear crude prices could eventually hit $200 per barrel.

Emmanuel noted that even local refiners like Dangote are not immune, as they must purchase feedstock at international market rates and pay double the shipping and insurance costs due to the conflict, which are ultimately passed on to Nigerian consumers at the pump.

Beyond storage, the advisory stresses the need for Nigeria to rebuild a national tanker fleet. In a striking comparison, Emmanuel noted that leasing a Very Large Crude Carrier (VLCC) now costs $500,000 per day, up from $100,000 just three weeks ago.

By owning its vessels and storage tanks in global hubs like Singapore, Houston, or Rotterdam, Nigeria could borrow against its inventory and stabilize its internal market during rainy days.

While the expert expressed hope for an eventual ceasefire, he warned the Nigerian government against wasting a good crisis.

He argued that without a legislative framework for scenario planning and a dedicated strategic reserve, the country will remain trapped in a cycle of price hikes and supply insecurity whenever global geopolitical tensions flare.