US-Iran war: FG rejects subsidy, price control return

The Federal Government has ruled out a return to fuel subsidies and the introduction of price control despite rising global oil prices triggered by tensions between the United States and Iran.

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, spoke during engagements with global investors in Paris, where he highlighted Nigeria’s economic outlook and reform trajectory.

In a statement, Oyedele said Nigeria would maintain its market-driven approach, stressing that subsidy removal remains irreversible to prevent distortions in the economy.

From around N200 per litre, petrol prices jumped above N500 when President Bola Tinubu announced that “the fuel subsidy is gone” during his inaugural speech on 29 May 2023. Since then, the price has been on an upward swing, hitting N1,200 in 2024 before the Dangote Petroleum Refinery’s interventions.

With the Dangote refinery, fuel prices were reduced to an average of N800 per litre until the Middle East tension caused disruptions in global oil supplies and triggered price hikes.

A litre of petrol has now jumped above N1,300 a litre, affecting the country’s inflation figures negatively.

“We will not bring back the fuel subsidy because it creates distortions for the economy, and we won’t introduce price control because we believe in the market,” Oyedele said.

Instead of subsidising fuel prices, Oyedele added that the ongoing geopolitical crisis in the Middle East presents opportunities for Nigeria in the global energy market.

“The situation in Iran presents new opportunities for us as the world looks to diversify sources of energy and invest in new markets,” he stated.

Oyedele noted that the country recorded significant economic expansion in dollar terms, reinforcing its long-term growth ambitions.

“Nigeria recorded a strong GDP growth rate of 11.2 per cent in US dollar terms in 2025, reinforcing the country’s ambition to achieve a $1tn economy by 2030,” he said.

The government has consistently defended its decision to remove the fuel subsidy, arguing that the policy distorted the economy and strained public finances.

Rising oil prices following the US-Iran tensions have, however, renewed concerns over petrol costs in Nigeria, with calls in some quarters for government intervention.

But authorities insist that sustaining a market-based pricing regime remains critical to attracting investment and ensuring macroeconomic stability.

However, Oyedele noted that there would be regulation in place to ensure fuel suppliers and marketers do not extort Nigerian consumers.

He added that the government will manage inflation as much as possible, expressing optimism that there are “better days ahead”.

Our correspondent recalls that officials of the Dangote refinery disclosed recently that the plant had been subsidising petrol and diesel prices since the war in Iran started in late February.

Meanwhile, Iran introduced a new mechanism, the ‘Persian Gulf Strait Authority’, to regulate maritime transit through the strategic Strait of Hormuz, according to Iranian state media.

WSJ reports that under the system, vessels intending to pass through the strait will receive guidance from an official email address outlining the rules for transit.

Ships are required to comply with the framework and obtain prior authorisation before crossing the waterway.

The move, it was learnt, is part of Iran’s broader effort to assert control over traffic through the strait, one of the world’s most critical oil shipping chokepoints, amid ongoing regional tensions and United States-led efforts to keep the waterway open.

On Wednesday, oil prices hovered around $108 per barrel following the escalation of the rift between the United States and Iran.

The latest surge in prices came after the US military said it had destroyed six of Iran’s small boats in response to Iranian attacks on commercial vessels in the waterway, and the United Arab Emirates reported coming under attack from Iranian missiles and drones on Monday.

An Iranian military source cited by the official IRNA news agency denied that US forces had sunk several Iranian boats, branding the US claim “false”.

According to Reuters, the CS Anthem chemical tanker exited the Strait of Hormuz on Monday, becoming the second commercial US-flagged vessel known to do so while protected by the US military.

Three other US-flagged ships that have been stuck in the region after the US and Israeli war with Iran began on February 28 reportedly remain in the Gulf.

It was learnt that US forces are helping to restore commercial shipping through the strait. The US Navy guided-missile destroyers are operating in the Gulf under a directive called ‘Project Freedom’.

On Monday, the head of the International Transport Workers’ Federation said that ships should not be asked to cross the strait “without a full guarantee of safety”.

According to the International Maritime Organisation, up to 20,000 seafarers remain stranded on about 2,000 vessels in the Strait of Hormuz. The IMO has said that there was “no precedent for the stranding of so many seafarers in the modern age.”