Meristem Securities projects Nigerian oil and banking stocks to benefit from global crude surge, citing gains for Seplat, Aradel and commercial banks

*Nigerian oil and banking stocks are expected to emerge as top gainers from the ongoing global surge in crude oil prices, according to Meristem Securities Limited.

Also read: NNPC uncovers sabotage plot against leadership, vows reforms will continue

In its latest macroeconomic and capital market report, the investment firm noted that escalating geopolitical tensions in the Middle East have pushed oil prices higher, presenting short to medium-term opportunities for Nigerian upstream oil producers and commercial banks.

Meristem identified firms such as Seplat Energy Plc, Geregu Power Plc, and Aradel Holdings Plc as potential beneficiaries, with expectations of stronger earnings due to their exposure to higher crude prices and increased production incentives.

“Given the sustained rally in global crude oil prices, upstream oil companies are well positioned to deliver improved earnings,” the report stated.

It also highlighted that Nigerian banks could profit from the high interest rate environment, which boosts net interest margins and drives earnings. This trend is likely to maintain investor confidence in the banking sector despite inflationary challenges faced by real sector firms.

“Elevated inflation and interest rates are expected to weigh on real sector performance by pressuring margins and limiting access to credit,” Meristem noted.

“Conversely, banks are likely to benefit through improved net interest income, sustaining their positive earnings trajectory and attracting continued market attention.”

In addition to capital market impacts, the firm said that Nigeria’s foreign exchange earnings and government revenue could benefit from the crude price rally. A rise in dollar inflows from oil exports may help stabilise the naira and improve fiscal buffers.

“Crude oil remains the dominant source of Nigeria’s foreign exchange earnings,” the report observed. “A sustained rise in global oil prices could translate into higher FX inflows for the country, boosting liquidity in the official FX market and enhancing exchange rate stability.”

However, the report warned that Nigeria’s gains may be limited if crude oil production continues to fall below budget expectations. It also flagged inflationary risks, especially under the country’s deregulated fuel pricing system.

“A sharp rise in international crude prices would directly reflect in domestic PMS prices. This increase would feed into the transportation segment of the CPI and could spill over into food inflation,” the firm explained.

Meristem added that fixed income investors may also benefit from attractive yields, driven by persistent global rate hikes and local inflation concerns, particularly as US monetary tightening continues to influence sentiment.

Also read: NUPRC dismisses oil block licensing irregularity claims, assures transparency

Despite the mixed outlook, the firm concluded that investor interest will likely favour oil and banking equities, while sectors exposed to rising production costs and tighter credit conditions may struggle to maintain momentum.