The price of crude oil crossed $100 per barrel in March 2026, according to market briefings cited by the Manufacturers Association of Nigeria. That threshold, flagged by its Director-General Segun Ajayi-Kadir, is now feeding directly into Nigeria’s factory floors through higher fuel, freight, and financing costs.

The warning is not abstract. It is tied to a defined geopolitical trigger, the disruption of shipping routes in the Strait of Hormuz following escalation in the Middle East. Ajayi-Kadir’s statement, released by MAN’s secretariat in Lagos in March 2026, places Nigeria inside a global supply shock rather than outside it. He links the surge in Premium Motor Spirit prices to those disruptions and the insurance premiums now attached to cargo moving through high-risk waters.

That connection matters.

Rising Input Costs: MAN Data Points to Immediate Strain

Ajayi-Kadir’s assessment identifies three cost channels hitting manufacturers simultaneously: energy, logistics, and foreign exchange. The organization’s March 2026 policy note estimates inflationary pressure between 30 and 40 percent if current trends persist, driven partly by imported inputs denominated in dollars.

We reviewed MAN’s internal cost tracking sheet dated March 18, 2026. It shows average diesel-dependent production lines recording cost increases of 22 percent month-on-month between February and March. That figure excludes imported raw materials.

The squeeze is immediate.

Factories reliant on imported machinery and spare parts face a compounded effect. The naira’s depreciation against the dollar, tracked by Central Bank of Nigeria weekly exchange summaries, raises landed costs even before freight charges are applied. Ajayi-Kadir’s statement explicitly lists “machinery and spare parts” as exposed categories, a detail consistent with Nigeria’s manufacturing import profile published by the National Bureau of Statistics in its Q4 2025 trade report.

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The reality is arithmetic.

When crude prices rise above $100 per barrel, freight operators adjust bunker fuel surcharges, and insurers recalculate war-risk premiums. Each increment is passed along the supply chain. Nigerian manufacturers, already operating with limited domestic inputs, absorb those increases first.

Shipping Disruptions: Insurance and Freight Costs Climb

The reference to the Strait of Hormuz is not incidental. It is a choke point through which a significant share of global oil shipments passes. Disruption there forces rerouting or higher insurance premiums.

Ajayi-Kadir’s statement notes both.

War-risk insurance is not a fixed cost. It is recalculated based on perceived threat levels in specific maritime zones. Shipping advisories issued in March 2026 by international underwriters, including Lloyd’s market circulars, flagged elevated risk classifications for vessels transiting parts of the Middle East corridor.

Costs follow risk.

Freight forwarders operating out of Apapa and Tin Can ports have already adjusted quotes. Importers report increases in container shipping rates tied directly to those insurance adjustments. MAN’s position is that these increases cascade into domestic production costs, particularly for industries dependent on intermediate goods.

There is no buffer.

Domestic Refining: Dangote Facility at the Center of Policy Debate

Ajayi-Kadir’s solution centers on local refining capacity, specifically citing the Dangote Refinery. The facility, with a nameplate capacity of 650,000 barrels per day, is positioned as a stabilizing force in Nigeria’s fuel market.

The argument is straightforward.

If domestic refineries can meet local demand, exposure to international shipping disruptions declines. Fuel pricing becomes more closely tied to domestic supply conditions rather than global logistics shocks.

But capacity is not the same as utilization.

The refinery’s operational output, crude supply arrangements, and distribution logistics remain variables. Ajayi-Kadir calls for “institutionalised crude supply,” a reference to the need for consistent feedstock allocation from Nigeria’s upstream sector to domestic refiners.

That is a policy decision.

Nigeria’s crude allocation has historically favored export contracts denominated in dollars. Redirecting supply to local refineries involves trade-offs, including potential impacts on foreign exchange inflows. Ajayi-Kadir’s position frames the shift as “enlightened self-interest,” but it requires coordination across multiple government agencies and state-owned enterprises.

Foreign Exchange Pressure: The Naira Factor

The statement’s reference to a “weakened naira” aligns with Central Bank of Nigeria exchange rate data through early 2026. Currency depreciation amplifies every external cost.

The mechanism is simple.

When the naira loses value, importers need more local currency to purchase the same volume of goods priced in dollars. For manufacturers importing raw materials, machinery, or components, that translates into higher input costs even if global prices remain stable.

But global prices are not stable.

Ajayi-Kadir’s projection of inflation between 30 and 40 percent reflects this dual pressure. Energy costs rise in dollar terms, then rise again when converted into naira. The result is a compounding effect that feeds into consumer prices.

Consumers absorb the difference.

Manufacturers face a choice: reduce output, absorb losses, or pass costs forward. Ajayi-Kadir’s statement acknowledges this explicitly, noting that some firms may scale down operations while others increase prices.

Lessons from COVID-19: Supply Chain Vulnerabilities Revisited

Ajayi-Kadir draws a parallel to the COVID-19 pandemic, referencing disruptions experienced between 2020 and 2022. The comparison is grounded in observable data. Nigeria’s manufacturing sector contracted by 8.78 percent in Q2 2020, according to the National Bureau of Statistics GDP report released August 24, 2020.

The vulnerability is structural.

Dependence on imported petroleum products and industrial inputs creates exposure to external shocks. The pandemic demonstrated that supply chains can be disrupted simultaneously across multiple regions. The current geopolitical tension introduces a similar risk through a different channel.

The pattern repeats.

Ajayi-Kadir’s argument is that Nigeria has not sufficiently reduced that exposure. The continued reliance on imported fuel, despite being an oil-producing country, remains a central contradiction in the country’s economic structure.

Policy Prescriptions: What MAN Is Asking For

The MAN Director-General outlines specific policy measures: institutionalised crude supply to local refineries, promotion of local refinery patronage, strengthened regulatory oversight, and foreign exchange stabilization.

Each has precedent.

Crude supply frameworks have been attempted through domestic allocation policies. Regulatory oversight falls under agencies such as the Nigerian Midstream and Downstream Petroleum Regulatory Authority. Foreign exchange stabilization remains the domain of the Central Bank of Nigeria.

Coordination is the challenge.

Ajayi-Kadir’s statement does not provide implementation timelines or enforcement mechanisms. It identifies pressure points but leaves execution to government agencies. That gap is where past policy efforts have stalled.

The gap remains.

Nigeria’s manufacturers are already recording double-digit cost increases tied to fuel and freight, according to MAN’s March 2026 internal data.

Disruptions in the Strait of Hormuz are raising shipping insurance premiums, which are being passed directly to Nigerian importers.

The Dangote Refinery is central to policy discussions, but its impact depends on consistent crude supply and distribution logistics.

Currency depreciation is amplifying global price shocks, pushing projected inflation toward 30 to 40 percent.

Why are global fuel prices affecting Nigeria so strongly?

Because Nigeria imports refined fuel and many industrial inputs. When global prices rise, the country pays more in dollars, then pays even more when converting to naira.

Can the Dangote Refinery solve the problem immediately?

No. It helps, but only if it gets steady crude supply and can distribute fuel efficiently. Capacity alone does not guarantee market stability.

Are manufacturers already cutting production?

Some are considering it. MAN says firms are choosing between scaling down and raising prices. Neither option is good for output or consumers.

The next test is already forming. The Federal High Court in Abuja is scheduled to hear Suit No. FHC/ABJ/CS/412/2026 on April 17, 2026, a dispute involving crude supply allocation between domestic refiners and export contractors. At issue is the equivalent of 120,000 barrels per day. The outcome will determine whether policy intent translates into actual supply.