In only the second win for an African side in Russian Federation so far, Nigeria broke the deadlock in the 49th minute when Victor Moses, playing as a wing-back, lofted a pass towards Musa who deftly controlled the ball and smashed in the half volley.
Group D is now set for a blockbuster finale on Tuesday when Iceland take on already-qualified Croatia in Rostov and Nigeria face Argentina in St. Petersburg.
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A second defeat following a 2-0 loss to Croatia in Group D will put Nigeria out of the running for a last-16 place and possibly lead to the German coach losing his job.
The Presidency has reacted to Super Eagles 2-0 win against Iceland. Also, Nigeria captain John Obi Mikel played in a more defensive role in midfield, his presence helping to shore up the defence against Iceland's two-man forward line.
Iceland had a chance to reduce the scoreline in the 89th minute, when they got a penalty, awarded by the VAR but Gylfi Sigurdsson went on to miss it. Musa deftly controlled the ball before slamming it past Iceland goalkeeper Hannes Halldorsson on the half-volley.
He said, "We have a plan to apply for Iceland in the hope of achieving goals early and making them feel bad", Moses said.