🍞 Imposed risk

Welcome to your midweek Daily Bread! 🍞

Fair warning: yes, we're talking about oil again.

I know, I know. But the global oil industry is in absolute chaos right now, and it keeps finding new ways to show up in the average Nigerian’s life, whether you invited it or not. Your fuel pump, your grocery bill, your electricity. Oil is everywhere, and not in the fun "Nigeria is rich" way.

So this week, we're breaking down why the world's oil mess is becoming Nigeria's cost-of-living crisis.

This one connects some dots.

We’ve talked about oil and Dangote a lot, so today, let’s start with a little rewind:

Africa's largest refinery, Dangote Refinery, came online in early 2024, and by the time the Middle East war broke out, it had already hit a milestone: supplying 62% of Nigeria's petrol, overtaking importers for the first time. It was even exporting fuel beyond West Africa. For a country that spent decades importing refined fuel despite sitting on crude oil, that was a genuinely big deal.

Then the war happened

The US-Israel conflict with Iran sent international crude prices surging and Dangote (which relies heavily on crude imports) got caught in the crossfire. The refinery had pledged to be a "stabilising force" in the market. Instead, it's been absorbing $18/barrel premiums to secure crude from international traders, pushing its costs to roughly $137/barrel at Tuesday's Brent prices.

Why is it importing crude at all?

This is where it gets frustrating. Nigeria is an oil producer. Dangote should theoretically be flush with local supply. But Nigerian upstream producers have consistently failed to deliver crude to the refinery as required under the Petroleum Industry Act (PIA), a law literally designed to fix this. Instead of the 13–15 local cargoes it needs monthly, Dangote was getting just five, forcing it to plug the gap expensively on the international market.

The wider production problem

It's not just a Dangote problem; Nigeria itself is underproducing. The country was supposed to hit 1.84 million barrels per day to support its 2026 budget. Instead, output dropped as low as 1.48 million bpd in February, creating a 16.6 million barrel shortfall in just two months. Fewer barrels mean harder choices between export commitments and domestic refining. Dangote has been losing that tug-of-war for months.

What's happening now

NNPC just bumped Dangote's crude allocation from five to seven cargoes for May, responding to record-high fuel prices. It's a meaningful gesture, but it still leaves the refinery running well below capacity. Nigerians are already paying 65% more for gasoline as a result of all this, and Dangote raised its depot prices by another 13% this month.

The irony no one wanted

Nigeria has the biggest refinery in Africa, record crude processing volumes as recently as January 2026, and growing export ambitions. But a combination of a foreign war, domestic underproduction, and upstream suppliers ignoring their legal obligations means ordinary Nigerians are paying record prices for fuel from their own refinery.

⚡African skies mean business: African airlines posted a 21% year-on-year jump in air cargo demand in January and February 2026. This is the strongest growth of any region globally, according to data from the International Air Transport Association. To put that in perspective: Middle East carriers grew 16.5%, Asia-Pacific 13.6%, and Europe a modest 6.9%. The standout lane was Africa-Asia, which surged 61.9% year-on-year — the fastest-growing cargo route in the world. It’s a modest win as Africa–Asia still represents just 1.3% of total global air cargo, so the high growth rates reflect a low base as much as a boom. Still, demand is outpacing capacity: Africa added 17.3% more cargo space while filling it 21% more (this is the kind of supply-demand gap that tends to attract investment). IATA's chief Willie Walsh flagged rising fuel costs and Middle East hub disruptions as potential roadblocks for the rest of the year, but for now, Africa’s air cargo industry is enjoying its winning streak.

🧂 Unilever is merging its food division with McCormick in what would be the second-largest food transaction in history. The unit generated €12.9 billion in sales last year and carries a 22.6% operating margin, actually outperforming the rest of the group. On paper, it looks like a great business to keep, but "good" is apparently not good enough. The food division has consistently grown at just 2.5%, well below Unilever's own 4–6% target. People in Europe and North America are cooling on ultra-processed food, increasingly drawn to smaller brands selling the "natural ingredients" aesthetic. So Unilever's food business now relies heavily on emerging markets like Nigeria, India, and China, where brand loyalty runs deeper. But even that growth isn't enough to move the needle. New CEO Fernando Fernandez is doubling down on personal care and beauty, and giving food the boot. Investors aren't entirely convinced, though: Unilever's shares are at their lowest since April 2024, with some questioning whether Fernandez is moving too fast.

☀️ Solar Wahala: China is ending the subsidies that made solar panels so cheap. The prices of solar in China fell from $0.25 per watt in 2022 to just $0.07 in 2025 due to government initiatives, which is why solar became somewhat popular in Nigeria. Now the trend is reversing. But the real problem isn't even the panels, it's the batteries. Without storage, solar only works when the sun is out. With storage, you actually have electricity. If batteries get expensive again, most Nigerians can't afford the full setup, which matters because the country is running on about 10% of its electricity capacity right now. Gas companies, electricity distributors, and the federal government are in a debt dispute, and nobody's blinking. Solar filled that gap for millions of people. It was the workaround that actually worked. And now the workaround is getting a price hike.

Start with the continent

The African Development Bank says if the Middle East conflict drags on beyond six months, Africa could lose up to 1.5% of economic growth. Even a short, three-month disruption already chips 0.2 percentage points off the continent's outlook. The AfDB has held its 2026 growth projection at 4.3%, but the bank's chief economist, Kelvin Urama, warned that the longer this goes, the worse it gets.

And the continent was already fragile going in. Africa's public debt hit $1.9 trillion in 2024, with debt servicing consuming over 31% of government revenues. FDI flows dropped 42% in just the first half of 2025. Foreign aid is also shrinking. 29 African countries are already recording currency depreciation. The war didn't create these vulnerabilities, but it's applying pressure to all of them at once.

Now zoom into Nigeria

Nigeria sits in an awkward middle ground. It exports oil, so rising crude prices should help. But it also imports raw materials, relies on international shipping lanes, and has a manufacturing sector that was only just recovering. The war is hitting all three pressure points simultaneously.

The Manufacturers Association of Nigeria (MAN) said, "Global geopolitics is no longer a television spectacle; it is a direct tax on the cost of production."

Ships avoiding the Strait of Hormuz means longer routes, higher freight costs, and steeper insurance premiums, all of which land directly on Nigerian factory invoices before a single product is made. A stronger US dollar, driven by the global flight to safe-haven assets, adds depreciation pressure on the naira and makes every dollar-denominated import more expensive.

Three sectors bearing the brunt

MAN identified the most exposed sectors:

The timing

Nigeria had genuinely just started turning a corner. Inflation had eased to 15.1%. Manufacturing capacity utilisation had climbed back above 60%. The IMF had raised Nigeria's 2026 growth forecast to 4.4%. None of those is spectacular numbers, but they represented real, hard-won progress.

MAN's historical warning gives the stakes some weight: during the US-Iraq war in 2003, Nigeria's manufacturing exports collapsed from $901m to $497m in a single year, and manufacturing GDP swung from +17.74% to -10.8%. Different conflict, familiar story.

What manufacturers want the government to do

The ask is threefold: fast-track energy transition, prioritise domestic refined petroleum supply, and have the Central Bank open a dedicated FX window for manufacturers importing critical raw materials to shield them from speculative volatility while they're already absorbing global shocks.

The bottom line

Africa is vulnerable, Nigeria is doubly so, and manufacturers who were just starting to recover are now watching a war price itself into their cost of doing business.