NGX Set for Massive Rally if Hormuz Re-opens as 2% USD Return Undervalues Oil Windfall

Nigeria stocks should see a solid rally in the coming weeks once the uncertainty hanging over the global economy from the US/Israel vs. Iran war is resolved.

While global energy benchmarks have been radically re-priced due to the U.S.-Israel-Iran war, the Nigerian stock market has remained relatively flat in dollar terms, creating what analysts call a “coiled spring” effect.

The assessment from Charlie Robertson (Head of Macro Strategy at FIM Partners) highlights a significant valuation disconnect in the Nigerian equities market.

“Bloomberg consensus has raised 2026 oil forecasts by about 1/3 since end-February and Nigeria’s stock market up just 2% in dollars. Yes it’s an outperformance vs most, but it implies upside even if the war is over within weeks and Hormuz re-opens,” Robertson said.

The Consensus Shift: Oil Forecasts Up 1/3

Since the conflict escalated in late February 2026, Bloomberg’s consensus for 2026 average oil prices has jumped significantly.

• The “War Premium”: Brent crude, which many analysts expected to average $60–$70 in 2026 due to a projected global surplus, is now being modeled at $90+ for the first half of the year.

• Hormuz Risk: The 33% upward revision reflects the market’s realization that even a short-lived blockade of the Strait of Hormuz creates a lasting inventory deficit that will take months to clear.

The 2% Dollar Return: A Valuation Lag

While the NGX All-Share Index (NGXASI) has gained roughly 29% in Naira terms YTD (crossing the historic 200,000-point mark), its performance in US Dollars is just +2%.

• The Upside Argument: Robertson argues that if oil remains at these elevated levels, Nigeria’s $50.45 billion reserves will continue to grow, eventually strengthening the Naira and turning that 29% local gain into a massive dollar-denominated return for foreign investors.

Why the “Re-Opening” Doesn’t End the Bull Case

Even if a truce is reached and the Strait of Hormuz re-opens within weeks, the structural benefits for Nigeria remain:

• Market Share Gain: During the weeks of Gulf disruption, European and Asian refiners have switched to Atlantic Basin grades (like Nigeria’s Bonny Light). These new supply contracts often have “sticky” durations beyond the immediate crisis.

• Fiscal Windfall: Estimates from the NESG suggest Nigeria could net an additional ₦2.3 trillion to ₦30 trillion in oil revenue this year alone. This liquidity will inevitably flow into the banking sector (Zenith, GTCO) and infrastructure (Dangote Cement, BUA Cement), driving the next leg of the stock market rally.