Rising Crude Prices Could Propel Daily Oil Theft Revenue to $16 Million, Warns Rewane

Mr. Bismarck Rewane, the Chief Executive Officer of Financial Derivatives Company Limited (FDC), has predicted that a rise in international crude oil prices, from approximately $64 per barrel (pb) to $110, could lead to a substantial increase in illicit revenue from stolen crude oil. He estimates this revenue could climb by 136.80 percent, escalating from an estimated $3 million daily in January to $16 million daily by April 2026. Rewane shared these insights during his April 2026 presentation at the Lagos Business School Breakfast Session, titled “Inflation Surge, Externally Induced, Internally Magnified: Six-Dimensional Impact Analysis.”

According to Rewane, the projected increase in revenue from oil theft and illegal bunkering activities would create stronger incentives for pipeline vandalism. This, he noted, might reduce the interest of Niger Delta militants in security contracts aimed at protecting oil infrastructure, contracts that were previously valued at $50 million per month.

Rewane pointed out that "Higher oil prices can worsen leakage and insecurity." He further elaborated that "not all oil gains translate to national benefit."

He provided an estimate that in January, when oil was priced at $64pb, approximately 100,000 barrels per day (bpd) were illicitly diverted and sold at a discounted rate of $30pb, generating $3 million daily. This situation made providing security for the government at $50 million monthly a financially attractive proposition.

However, Rewane projects that by April, with crude oil prices reaching $110pb, an estimated 200,000bpd could be stolen and sold at a discounted price of $80pb, yielding $16 million in daily revenue. This increased profitability, he suggested, would likely make militants "no longer interested in security contracts."

Discussing "Oil Militants (Creek Economics)," Rewane highlighted that an "incentive for vandalism, oil theft and bunkering in the illicit market will increase" due to the "increase profitability of illegal diversions."

He also anticipates "increased pipeline vandalism, higher security costs to government and escalation in production losses."

Examining a specific, unnamed brewery as a case study, Rewane indicated that the profitability of Nigeria's manufacturing sector could be reduced by as much as 60 percent.

He presented data showing the brewery generated N299.49 billion in revenue with a profit of N25.41 billion in 2025. Its expenses for raw materials, logistics, and power were N149.02 billion, N3.76 billion, and N11.82 billion, respectively, with other costs amounting to N109.42 billion.

However, Rewane projected that with an 80 to 100 percent increase in diesel prices, coupled with more expensive imports due to foreign exchange pressures and declining demand, the brewery's new financial reality would be N310 billion in revenue but a reduced profit of N10.80 billion. This shift is attributed to increased costs for raw materials (N165.70 billion), logistics (N5.4 billion), power (N17.3 billion), and other expenses (N110.8 billion).

Rewane stated that escalating input and energy expenses would significantly shrink profit margins, increase pressure on working capital, and lead to higher inventory levels as sales falter.

"Cost push inflation will erode industrial margins quickly," Rewane asserted.

He further noted, "Even though Nigeria is among the beneficiaries of the oil price revenue, external shocks will continue to impact the economy as the country is increasingly integrated with the global market."

Rewane posited that the disruption of global commerce due to military conflict in Iran, which has led to the blockage of the Strait of Hormuz, would reduce Nigeria's projected GDP growth from 3.8 percent in Q1 2026 to 3.2 percent. This scenario would compress private sector margins and trigger worker layoffs, despite potential gains in government revenue.

He projected that "Net employment will decline, consumption declines due to falling real incomes, investment remains flat showing limited sector response, exports increase while marginal propensity to import decreases."

Rewane also anticipates that the energy-induced shock would push the middle class towards financial fragility and cause traders and SMEs to experience profit losses.

He described the energy shock stemming from the ongoing conflict involving the United States of America, Israel, and Iran as potentially more impactful than all previous Gulf wars combined.

Rewane illustrated the impact on a salaried employee in Lagos with a family, stating that such an individual saving N150,000 monthly from a N1.2 million income in January could face a deficit of N110,000 by April.

"A mid-level professional in Lagos, commutes daily, supports family, within 45 days, savings decline significantly as expenses outpaces income and discretionary spending reduces sharply.

"In 90 days, he would cut savings to zero, start borrowing/using credit, and cut food quality, visits to family and friends and discretionary spending.

"Therefore, the middle class gets financially squeezed into fragility as consumption drops, feeding directly into economic slowdown."

Rewane projected that a hypothetical trader importing or buying goods wholesale and reselling them in the local market could experience a 50 percent drop in profit between January and April 2026. This is due to slower inventory turnover, tightening cash flow, and significantly shrinking profit margins as costs rise faster than prices.

"Therefore, SMEs get hit from both sides of rising costs and falling demand. Leading to a rise in unemployment," he concluded.

Analyzing the Kaduna State Government as a case study, Rewane projected that the state's monthly FAAC (Federation Account Allocation Committee) receipts would increase from N28 billion in January to N40 billion in April. This would consequently reduce its deficit spending from N28 billion to N16 billion.

Rewane indicated that Kaduna State's "higher FAAC inflows reduce fiscal deficit and improve cash position," enabling the state to more comfortably meet salary and debt obligations. He suggested the state might then invest productively in infrastructure, settle contractors, increase recurrent and political spending, or reintroduce subsidies in the short term.

He also foresaw a resurgence of inflation, with headline inflation reaching 15.85 percent, food inflation at 14.94 percent, and core inflation at 14.35 percent.

"Households would face a 15-20 percent drop in real purchasing power as transport costs surge, inflating food and commodity prices by 15 to 30 percent.

"Low-income families, spending 40 to 60 percent of income on basics, would cut staples and healthcare, mimicking 2023 subsidy removal effects where inflation hit 34 percent.

"Rising fuel costs act like a multiplier, worsening both monetary poverty and non-monetary deprivations, and pushing more people into chronic multidimensional poverty."