.Higher prices may worsen Nigeria’s poverty, IMF warns
Oil prices soared and stock markets slid Wednesday after US President Donald Trump said the ceasefire with Iran was over, following renewed strikes in the Middle East.
The latest bout of fighting was sparked by Iranian attacks on ships in the vital Strait of Hormuz shipping route.
Trump said at a NATO summit in Turkey the ceasefire was “over” but left the door open to more talks.
International benchmark Brent North Sea crude jumped more than five percent to around $78 a barrel.
The main US contract, West Texas Intermediate, also rallied five percent.
In Europe, Paris and Frankfurt shed around two percent while London was down nearly 1.5 percent around midday.
“Geopolitical risks are rising” for markets, noted Kathleen Brooks, research director at trading group XTB.
The US launched extensive strikes on Iran this week following attacks on ships in the strait, triggering a wave of reprisals against American bases in the Gulf.
Washington also revoked a temporary sanctions waiver for Iranian oil.
Brooks added that “for the Brent crude oil price to extend gains above $80 per barrel, we would need to see another US naval blockade of the Strait of Hormuz, which would stop Iran from selling its oil and cause a major escalation in tensions”.
Equities in Asia also suffered, with the geopolitical tensions coming on top of a retreat from the tech sector on concerns over the eye-watering sums being invested in AI.
Seoul’s Kospi — which has been Asia’s poster child for the tech rally — sank more than five percent and has lost more than 20 percent since hitting a record high last month.
Samsung took another hit following a rout Tuesday that came despite the firm forecasting a roughly 19-fold jump in second-quarter operating profit from a year earlier on the back of strong AI chip demand.
The company and rival SK hynix both tumbled around six percent.
“Investors have been spooked in recent weeks by fears of excessive spending in the AI world and rich valuations in parts of the tech space, causing widespread profit-taking,” said Dan Coatsworth, head of markets at AJ Bell.
There were losses also in Tokyo and Shanghai.
However, Hong Kong rose three percent as traders chased beaten-down Chinese tech stocks, with Alibaba piling on more than 12 percent, and JD.com and Tencent each up almost four percent.
The dollar gained against its peers as the prospect of another hit to Middle East oil supplies fuelled concerns that inflation could remain elevated for longer than feared, putting pressure on the Federal Reserve to hike interest rates.
Key figures around 1100 GMT
Brent North Sea Crude: UP 5.1 percent at $77.93 a barrel
West Texas Intermediate: UP 5.0 percent at $73.95 a barrel
London – FTSE 100: DOWN 1.4 percent at 10,516.16 points
Paris – CAC 40: DOWN 2.0 percent at 8,265.75
Frankfurt – DAX: DOWN 2.1 percent at 24,929.06
Seoul – Kospi: DOWN 5.4 percent at 7,246.79 (close)
Tokyo – Nikkei 225: DOWN 2.1 percent at 66,819.05 (close)
Hong Kong – Hang Seng Index: UP 3.0 percent at 24,199.46 (close)
Shanghai – Composite: DOWN 0.5 percent at 3,970.88 (close)
New York – Dow: DOWN 0.3 percent at 52,925.15 (close)
Euro/dollar: DOWN at $1.1406 from $1.1415
Pound/dollar: DOWN at $1.3344 from $1.3360
Dollar/yen: UP at 162.49 yen from 162.09 yen on Tuesday
Euro/pound: UP at 85.49 pence from 85.44 pence.
Meanwhile, the International Monetary Fund has warned that rising prices of essential goods could deepen poverty and worsen food insecurity in Nigeria despite recent improvements in the country’s macroeconomic stability.
The warning was contained in the IMF’s July 2026 World Economic Outlook Update, which projected that Nigeria’s economy would grow by 4.1 per cent in 2026 and 4.3 per cent in 2027, while cautioning that higher prices for basic necessities could offset some of the gains from ongoing economic reforms.
According to the report, released on Wednesday, Nigeria has continued to benefit from improved macroeconomic conditions and stronger terms of trade, but households remain vulnerable to rising living costs.
The report read, “Nigeria is supported by improved macroeconomic stability and favourable terms-of-trade effects, though higher prices for essentials are expected to further aggravate poverty and food insecurity.”
The IMF noted that growth across sub-Saharan Africa was expected to remain broadly stable at 4.3 per cent in 2026, although performance would vary widely among countries depending on policy choices, reform implementation and exposure to external shocks.
It said oil-importing and non-resource-intensive economies in the region were likely to suffer more from rising energy and food prices, while some larger economies had benefited from earlier stabilisation efforts despite facing weaker official development assistance and missing out on much of the artificial intelligence-driven global technology boom.
The Fund retained its forecast for Nigeria’s economic growth at 4.1 per cent in 2026, unchanged from its April outlook, and projected a further increase to 4.3 per cent in 2027.
Globally, the IMF projected economic growth of 3.0 per cent in 2026 and 3.4 per cent in 2027, compared with an average of 3.5 per cent in 2024 and 2025.
It attributed the slowdown to the economic fallout from the war in the Middle East, although stronger technology investment driven by advances in artificial intelligence was expected to partly offset the impact.
The Fund also warned that inflationary pressures had intensified following higher energy prices.
It said, “Global headline inflation is expected to increase from 4.1 percent in 2025 to 4.7 percent in 2026 before declining to 3.9 percent in 2027,” adding that the recent projections suggested “the disinflation trend in place since the beginning of 2024 has stalled.”
According to the IMF, renewed geopolitical tensions remain the biggest downside risk to the global economy.
It warned, “The possibility of renewed Middle East conflict looms large and could extend commodity price volatility, further threaten supply chains, raise prices, and weigh on financial conditions.”
The report projected that higher energy costs would continue to feed into food prices. It estimated that crude oil prices would rise by 32 per cent in 2026 compared with 2025 levels, while natural gas prices would increase by 22 per cent. Fertiliser prices were forecast to rise by 26 per cent, with food prices expected to increase by eight per cent because of higher energy, transport and fertiliser costs.
The IMF further cautioned that food insecurity could deteriorate if disruptions in energy and fertiliser markets persisted.
It said, “Food insecurity could worsen materially if disruptions in fertilizer and energy markets intensify or linger, especially in low-income countries in South Asia and sub-Saharan Africa, whose food supply is provided largely by smallholder farmers unable to outbid competitors from wealthier nations.”
The Fund advised governments to avoid broad-based fuel subsidies, tax cuts and price controls, arguing that such measures are expensive and often poorly targeted.
Instead, it recommended temporary and targeted support for vulnerable households while maintaining policies aimed at restoring price stability.
