A wave of risk aversion swept across global financial markets on Monday as the escalation of the Israel–US–Iran conflict sent energy prices surging and triggered a massive flight to safety.
With key energy installations targeted over the weekend and the Strait of Hormuz, a chokepoint for 20% of the world’s oil, effectively closed, Brent crude spiked above $120 per barrel.
This represents a staggering 25% jump in the commodity space, pushing 2026 gains for Brent to over 70%, while WTI crude has rallied nearly 80% year-to-date.
Impact on Nigeria: A Double-Edged Windfall
For major oil producers like Nigeria, the price surge presents a complex scenario. While the country stands to see a significant fiscal boost from the oil windfall, analysts warn that the primary challenge will be putting a lid on domestic inflation.
With global energy costs soaring, Nigeria must strategically utilize these gains for critical budget needs and infrastructure, while simultaneously shielding the economy from the inevitable inflationary shocks that accompany triple-digit oil prices.
Equities Sink as Fear Grips Investors
The flight to safety was visible across all major boards on Monday:
- Asia: Shares plunged as investors scrambled to price in the chaos.
- Europe: Markets opened deep in the red.
- United States: Equity futures signaled a negative open as risk-off sentiment dominated.
In the currency markets, the U.S. Dollar and Swiss Franc remain the preferred havens. However, the Canadian Dollar has emerged as the star performer of the month, appreciating against every G10 currency due to its high sensitivity to oil prices.
Gold and the Fed: A Shifting Landscape
Despite the geopolitical chaos, Gold ended last week in losses. While traditionally a safe haven, the yellow metal is currently locked in a daily range, pressured by a broadly stronger dollar and rising energy-driven inflation fears.
Technical analysts suggest that a weekly close below the $5,000 support level could signal a steeper decline.
Meanwhile, the U.S. labour market showed significant cracks on Friday; Non-Farm Payrolls (NFP) slid by 92,000, the biggest monthly decline since October 2025, while the unemployment rate climbed to 4.4%.
“Surging energy prices have forced markets to reassess the possibility of lower interest rates,” noted Matthew Anthony, senior market analyst -Africa at FXTM. “Traders are now pricing only a 50% chance that the Fed will cut rates twice in 2026.”
The Week Ahead: All Eyes on CPI
Investors are now pivoting to upcoming U.S. data for clarity. The February CPI and January PCE index (the Fed’s preferred gauge) will be crucial.
If inflation data remains hot, expectations for Fed rate cuts could be further shaved, likely strengthening the dollar and inflicting fresh pain on precious metals and emerging market currencies alike.
