The United States and Iran have finalised a peace agreement that brings an end to a three-month conflict which rattled global markets and drove energy prices to multi-year highs. U.S. President Donald Trump announced the development on his Truth Social platform on Sunday, confirming that a deal with the Islamic Republic of Iran had been completed.
The agreement includes the lifting of a weeks-long U.S. naval blockade of Iranian ports and the reopening of the Strait of Hormuz to global shipping — a critical chokepoint for oil tankers.
Global crude oil prices fell sharply after the announcement, with markets pricing in improved supply conditions and reduced geopolitical risk. During the conflict, crude had climbed from below $70 per barrel to as high as $130.
**Fuel prices and inflation**
Nigeria felt the impact acutely through elevated pump prices. Petrol, which sold for about N850 per litre before the conflict, rose to as high as N1,350 per litre, and above N1,400 in some locations. With Nigeria now operating a largely market-based fuel pricing system following the removal of the petrol subsidy, local prices track movements in global crude and exchange rates.
A sustained decline in crude prices should translate to lower petrol costs within weeks, assuming the deal holds. This would feed directly into inflation, which stood at 15.9% in May 2026 according to the National Bureau of Statistics. The war had driven up food and logistics costs, eroding household purchasing power.
**Government revenue and the budget**
While higher crude prices during the conflict provided some support to government revenue and narrowed pressure on fiscal deficits, the return of lower prices could squeeze revenues. However, the 2026 budget was benchmarked at $75 per barrel, which may limit the fiscal impact if crude stabilises around that level.
**Exchange rate and capital flows**
Nigeria recorded approximately $10 billion in capital inflows in the first quarter of 2026, according to the NBS Capital Importation Report, and the naira has been relatively stable. Lower crude earnings could pressure external reserves and the exchange rate. However, a decline in global inflation and energy costs would also reduce the cost of imported goods, partially offsetting the foreign exchange impact.
**Interest rates and investment**
The conflict had forced Nigeria to maintain high interest rates to attract foreign portfolio inflows amid rising global inflation. With the peace deal signed, global inflation is expected to ease, potentially leading to lower interest rates worldwide. This could renew investor appetite for frontier markets like Nigeria. Lower government borrowing costs may also translate to cheaper credit for businesses, supporting expansion and hiring.
**Stock market outlook**
The Nigerian Exchange has gained approximately 60% year-to-date, driven largely by domestic investors who account for more than 80% of transactions. A sustained decline in global rates could channel additional foreign portfolio flows into Nigeria, providing further support for equities. Investors who position early stand to benefit if market sentiment continues to improve.
