• IMF leaves Nigeria’s 2026 growth forecast at 4.1% and 4.3% for 2027
•S&P Dow Jones may reclassify Nigeria as frontier market
Emmanuel Addeh in Abuja and Nume Ekeghe in Lagos
Crude Oil prices jumped over 8 percent yesterday, hitting over a two-week high, after U.S. President Donald Trump declared that the Memorandum of Understanding (MoU) signed with Iran to end the Gulf conflict was over.
Trump warned Iran that the US will likely engage in additional strikes last night (Wednesday) after attacks the previous day, adding that the country might take over Kharg Island as well.
Specifically, Brent crude futures were up by as much as 8.05 per cent as of yesterday evening, hitting $80.05 a barrel, while U.S. West Texas Intermediate (WTI) crude climbed 7.5 per cent to $75.72 per barrel.
Trump said earlier that the memorandum of understanding signed with Iran to end the conflict was “over,” adding he didn’t want to engage with Tehran any longer.
An agreement brokered by Pakistan last month to provide a 60-day window for negotiations, came under strain after the U.S. launched fresh strikes on Iran. The U.S. airstrikes were in response to Iranian attacks on three commercial vessels that were transiting the Strait of Hormuz, U.S. Central Command said on Tuesday.
In retaliation, the Iran’s Revolutionary Guards then said they targeted U.S. military sites in Bahrain and Kuwait early yesterday. The attacks renewed concerns about tanker traffic through the Strait of Hormuz, which carried about one-fifth of global energy supply before the war began in late February.
Iran exports 90 per cent of its crude via Kharg Island, which sits 16 miles (26 km) from Iran’s coast in the northern end of the Gulf, and about 300 miles (483 km) northwest of the strait. Seizing Kharg would give the U.S. the ability to severely disrupt Iran’s energy trade.
At least four oil and gas tankers have turned back from attempting to transit the strait, ship-tracking data showed, as renewed attacks on vessels heightened safety concerns.
After the U.S. and Iran signed their truce last month, oil prices tumbled to pre-war levels of about $70 and traders amassed large short positions in oil futures, betting prices would fall further.
Since the start of the conflict, nations have drawn down their inventories to make up for the supply shortfall.
Also, Nigeria’s Dangote Group plans to finance a proposed 700,000-barrel per day oil refinery in Kenya through internal cash flow, bonds and an initial public offering, a senior company executive told Reuters.
The refinery, East Africa’s largest refining project, is expected to take up to three years to build and would supply refined petroleum products to Kenya and neighbouring countries, helping to reduce East Africa’s dependence on imported fuels, the report said.
It would also fulfil Dangote’s ambition to expand fuel-processing capacity across Africa following the start-up of its 650,000-barrel-per-day refinery in Lagos.
“The site has been selected, soil tests are under way, and design and engineering work has commenced. Kenya was the choice from the beginning,” Edwin Devakumar, Dangote Industries’ vice president for oil and gas, told Reuters.
The refinery, which would be built on the island of Lamu, off the coast of Kenya, would mark Dangote Group’s biggest refining investment outside Nigeria and would cost about $17 billion , it was learnt.
Devakumar said the refinery would be financed through a mix of internally generated cash, bonds and proceeds from a planned initial public offering. He did not disclose the project’s exact cost, but said it would be comparable to that of the Lagos refinery.
Built by Aliko Dangote, ranked as Africa’s richest man by Forbes, the Lagos refinery had cost more than $20 billion by the time it began operating in 2024.
It will take around 30 months to build the facility in East Africa’s largest economy, it was learnt, even as there had been conflicting messages on the project’s location for months, with Tanzania and the Kenyan port of Mombasa also mooted.
Nigerian billionaire Dangote was in Tanzania late last month, where he held talks with President Samia Suluhu Hassan and explained the commercial and technical considerations behind the Group’s decision to locate the planned East African facility.
Meanwhile, the International Monetary Fund (IMF) has maintained Nigeria’s economic growth forecast at 4.1 per cent for 2026 and 4.3 per cent for 2027, leaving unchanged its previous projections contained in its April 2026 World Economic Outlook (WEO) despite heightened global uncertainty stemming from the Middle East conflict.
In its July 2026 World Economic Outlook (WEO) Update, titled, “Global Economy in Crosscurrents of War and Technology,” released yesterday, the Washington-based institution noted that Nigeria’s growth outlook remains broadly stable, supported by improved macroeconomic stability and favourable terms of trade as an oil-exporting nation, although higher prices for essential goods are expected to aggravate poverty and food insecurity.
For Sub-Saharan Africa, the IMF predicted that the region’s growth would remain at 4.3 per cent in 2026 before improving to 4.5 per cent in 2027, representing a minimal 0.1 percentage point upward revision from its April forecast.
The report stated: “Nigeria is supported by improved macroeconomic stability and favorable terms-of-trade effects, though higher prices for essentials are expected to further aggravate poverty and food insecurity.”
Speaking during a virtual briefing on the report, the Division Chief in the IMF’s Research Department, Deniz Igan, said Nigeria remains one of the region’s stronger-performing large economies, with growth underpinned by policy reforms that have improved macroeconomic stability.
“Just to give you a sense, the two largest economies in the region: Nigeria is expected to grow at 4.1 per cent, quite stable, and this is supported by improved macroeconomic stability and favourable terms of trade, with Nigeria being an oil exporter.
“At the same time, tighter prices so there is some offset to that positive terms-of-trade effect because higher prices for essentials are expected to aggravate poverty and food insecurity,” Igan added.
The IMF also left Nigeria’s 2027 growth projection unchanged at 4.3 per cent, reinforcing its view that recent macroeconomic reforms were helping to strengthen resilience despite a challenging external environment.
Globally, the Fund projected economic growth to moderate to three per cent in 2026, down from 3.5 per cent in 2025, as the economic fallout from the Middle East conflict offsets part of the gains from the accelerating artificial intelligence (AI)-driven technology cycle.
On SSA’s outlook, Igan added: “The broader outlook for Sub-Saharan Africa is faring within this picture. Let me start by noting that we actually had seen a broad-based pickup in growth in 2025 in the region. We had an acceleration of growth to 4.5 per cent.
“Now, the war obviously has clouded the outlook for 2026, and we are now projecting a softening of growth to 4.3 per cent in the region as a whole.”
She explained that the deterioration in the outlook extends beyond higher energy costs, noting that rising fertiliser prices are coinciding with the planting season in several African countries and could weigh heavily on agricultural output.
“This is beyond the cost of energy for the region. What matters also is the increase in fertilizer prices that we have seen, and this is coinciding with the planting season in some countries, and it may hurt the agricultural sector, in addition to all the other impacts of energy prices. The agricultural sector accounts for a large share of some Sub-Saharan economies,” the IMF said.
According to Igan, the regional outlook masks wide differences in country performance, reflecting disparities in policy space, reform implementation and exposure to both the Middle East conflict and the global technology value chain.
“Again, the overall picture, the relatively small softening to 4.3 per cent is masking substantial divergence across countries. This reflects primarily the differences in policy space, how reform implementation has been going even before the shock arrived, but also how exposed different economies have been, both to the war and to the technology chain.
“Basically, what we are seeing is that the oil-importing, non-resource-intensive economies are more adversely affected by the higher energy and food prices, while some larger economies in the region are continuing to benefit from earlier stabilisation and reform efforts,” Igan stressed.
On artificial intelligence, Igan said African countries stand to benefit from AI adoption but only if they significantly strengthen digital infrastructure and invest in human capital.
“In terms of the AI issue, what is important to recognise is that, in order for countries to benefit, there are preconditions how well they were already integrated into the technology chains, and, going forward, how well they can position themselves in terms of adopting AI.
“We have done several analyses there, and one thing to note is that while Sub-Saharan Africa is poised to benefit from some of the adoption of AI, there is a need for more investment in infrastructure and in skills upgrading in order to reap even greater benefits,” she added.
In the meantime, S&P Dow Jones Indices (S&P DJI) has placed Nigeria on its 2027 watchlist for a potential reclassification as a “frontier” market, citing regulatory reforms aimed at improving transparency, market integrity, and accessibility.
The global index provider disclosed this in a notice released yesterday, noting that it will monitor developments in Nigeria for the remainder of 2026 before deciding whether to reclassify the country from its current “Standalone” status to “Frontier” during its 2027 Country Classification Annual Review.
The development signals growing international recognition of reforms in Nigeria’s capital market, although S&P stressed that consistent policy implementation and stronger operational resilience will be critical before any upgrade is approved.
“The Nigerian regulatory environment has modernised to improve transparency, enforcement,
and market integrity. While these reforms are intended to support a structurally more accessible market, consistency in policy application and operational resilience are required for reclassification.
“Consequently, S&P DJI places Nigeria on its 2027 watchlist and will closely monitor developments for the remainder of 2026 and potentially consider Nigeria’s status for reclassification to Frontier from Standalone in conjunction with next year’s Country Classification review,” it said in a note.
