Investment analysts at Meristem Securities say Nigerian oil and banking stocks may gain ground due to the global surge in crude oil prices, fueled by ongoing tensions in the Middle East.

In a new report, the firm highlights that companies involved in oil production—such as Seplat Energy, Geregu Power, and Aradel Holdings—are well-positioned to benefit from the higher prices because of their upstream operations.

Banks are also expected to do well, as elevated interest rates typically boost their earnings through increased net interest income. While inflation and high borrowing costs may challenge other sectors, banks could attract more investor attention due to stronger profit potential.

On a broader scale, Meristem says Nigeria could see an improvement in foreign exchange inflows and government revenue if crude prices remain high. This could help stabilize the naira and support fiscal health in the near future.

However, the report warns that the positive impact of rising oil prices could be limited if Nigeria fails to meet its oil production targets. In addition, higher fuel prices, due to deregulation, could worsen inflation—especially by increasing transport and food costs.

In the bond market, attractive yields are expected to continue drawing investor interest, driven by global rate hikes and local inflation risks.

Meristem concludes that while the overall investment outlook is mixed, interest is likely to shift more toward oil and banking stocks, as inflationary pressure and credit constraints weigh on other parts of the economy.