Group projects 40% freight hike on US-Iran crisis

A maritime research group under the auspices of the Sea Empowerment and Research Centre has stated that the ongoing escalation between the United States and Iran could increase global freight rates by 15 to 40 per cent due to rerouting and risk premiums.

The group added that the ongoing escalation between the United States and Iran presents significant geopolitical and economic risks to global energy markets and maritime trade systems.

SEREC disclosed this in a statement on Sunday, signed by its Head of Research, Mr Eugene Nweke, and obtained by The PUNCH.

The group reiterated the vulnerability of the Strait of Hormuz, through which approximately one-fifth of the global crude oil supply transits daily. It added that any prolonged disruption could trigger sustained oil price volatility, freight rate escalation, war-risk insurance spikes, and global inflationary pressure.

According to SEREC, at $120 per barrel, additional oil revenue could reach $18 bn to $22 bn annually, adding that gross domestic product growth may increase by 1–1.2 per cent in the short term.

SEREC nevertheless warned that inflation may rise by 3–5 per cent, driven by logistics and imported input costs. “Exchange rate volatility could intensify, and food and transport prices may escalate sharply. Without prudent fiscal discipline, revenue gains could be offset by macroeconomic instability,” it warned.

The group pointed out that the operationalisation of the Dangote Refinery materially alters Nigeria’s vulnerability profile, stressing that its economic relevance in the current crisis includes “reduction in refined fuel import dependence, lowering exposure to freight and insurance shocks, moderation of foreign exchange demand, easing pressure on the naira, potential to reduce imported fuel inflation transmission by an estimated 1–2 percentage points, and opportunity to expand refined product exports across West and Central Africa under the African Continental Free Trade Area framework”.

SEREC advised that if strategically managed, the refinery serves as a national economic stabiliser during external shocks.

SEREC maintained that import-dependent economies face heightened fuel and food inflation. “Shipping diversions around Africa may increase voyage duration and cost. Currency depreciation pressures may intensify, and maritime security demands will expand. Nigeria’s refining capacity offers a comparative advantage if integrated with regional supply networks and supported through frameworks such as the Economic Community of West African States cooperation mechanisms,” SEREC stressed.

The group advised the government to channel oil windfall gains into stabilisation and infrastructure investment, not recurrent expenditure. “Guarantee steady crude allocation to domestic refineries to sustain supply stability; strengthen maritime security coordination across the Gulf of Guinea; expand strategic petroleum and refined product reserves; and deepen regional trade integration to reduce overreliance on volatile extra-African shipping routes,” it stressed.

SEREC added that the US–Iran confrontation is more than a geopolitical conflict; “it is a structural stress test for global trade and maritime systems. Nigeria’s resilience will depend not merely on crude revenue gains but also on disciplined fiscal management, domestic refining optimisation, trade diversification, and maritime competitiveness.”