Nigeria’s Eurobonds slide as Middle East crisis rattles global markets

NIGERIA’S sovereign Eurobonds opened the week under pressure after rising geopolitical tensions in the Middle East sparked a broad retreat from emerging market assets. Yields on Nigeria’s Eurobonds climbed to 7.11 percent, up from 6.98 percent recorded last Friday, as investors shifted funds into traditional safe havens such as gold and U.S. Treasuries.

The sell-off followed reports of a major joint military strike by the United States and Israel on Iran’s nuclear and military facilities. The operation led to the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei. Over the weekend, U.S. President Donald Trump said the mission’s objectives would be pursued, signaling that tensions could persist rather than ease quickly.

Across Sub-Saharan Africa, Eurobond markets reflected similar weakness at the start of trading. Nigerian benchmark papers fell between 12 cents and 60 cents in early deals, mirroring the cautious mood among foreign portfolio investors. The market reaction underscores how quickly global risk events can trigger capital outflows from frontier and emerging economies.

For Nigeria, the situation presents a complex outlook. As Africa’s largest crude producer, higher oil prices typically translate into stronger export earnings and improved fiscal buffers. However, the benefits may be offset by domestic challenges, including the risk of higher fuel prices and renewed capital flight if global uncertainty lingers.

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The immediate impact of the strikes was most visible in the oil market. Brent crude, which serves as the benchmark for Nigeria’s Bonny Light, initially climbed toward $73 per barrel on Sunday, its highest level in six months, before extending gains to $78.74 per barrel on Monday. The move came despite a decision by OPEC+ to modestly raise output in an attempt to stabilise supply. With prices well above Nigeria’s 2026 budget benchmark of $64.85 per barrel, the surge strengthens revenue prospects, at least in the short term.

Market analysts, however, caution against assuming sustained gains. An emerging markets expert, Mr Ike Ibeabuchi, explained that while elevated oil prices are broadly positive for Nigeria’s fiscal position, domestic petrol costs remain a key risk.

International banks are also weighing the possibility of a sharper oil rally. Analysts at JPMorgan, Goldman Sachs, and Barclays have raised the prospect of crude returning to $100 per barrel, a level last seen in 2022, if the conflict deepens. Helima Croft of RBC Capital Markets warned that a prolonged or full-scale war involving Iran could push prices significantly beyond that threshold

Head of Geopolitical Analysis at Rystad Energy, Mr Jorge León, told Yahoo Finance that without any signs of deescalation, prices could surge dramatically, with Brent potentially nearing $100.

Meanwhile, safe-haven demand strengthened. Gold prices advanced sharply, reflecting investor preference for lower-risk assets. According to Reuters, spot gold rose 2.3 percent to $5,395.99 per ounce by 0914 GMT, after touching a more than four-week high earlier in the session. The precious metal previously reached a record $5,594.82 on January 29.