Global oil prices climbed sharply in early trading on Monday as the escalating military confrontation between the United States and Iran fuelled fresh fears over crude supply disruptions from the Middle East, pushing Brent crude above the critical $90 per barrel threshold for the first time in months.
As at the time of writing 05:00 am (WAT), Brent crude the international benchmark against which Nigeria's crude grades are priced traded at $90.24 per barrel, representing a 2.43 per cent increase, while West Texas Intermediate (WTI) rose 2.25 per cent to $84.35 per barrel, extending last week's rally.
The latest price surge follows a dramatic escalation in hostilities between Washington and Tehran after a series of coordinated military strikes across the region. The conflict has intensified concerns over the security of oil infrastructure and shipping routes in the Gulf, particularly the Strait of Hormuz, the narrow waterway through which roughly one-fifth of the world's seaborne crude oil and petroleum products passes daily.
Market participants are increasingly pricing in the risk of prolonged supply disruptions as reports indicate that commercial shipping activity through the Strait has slowed significantly amid heightened security concerns. The conflict has also seen attacks on strategic oil facilities, power infrastructure and desalination plants across parts of the Gulf, while retaliatory strikes have targeted key Iranian infrastructure, further increasing uncertainty in global energy markets.
For Nigeria, the development presents both opportunities and challenges. As Africa's largest crude oil producer, sustained oil prices above $90 per barrel could significantly improve export earnings, strengthen government revenues and provide additional fiscal support for the implementation of the 2026 budget. Higher crude prices could also improve foreign exchange inflows at a time when authorities continue efforts to stabilise the naira and rebuild external reserves.
However, industry analysts caution that the benefits may be tempered by rising replacement costs for refined petroleum products. Nigeria still relies on imported refined fuels to complement domestic supply despite increasing output from the Dangote Petroleum Refinery. Should the conflict persist, marketers may face higher import costs, with the pressure likely to filter through the downstream supply chain, potentially triggering another round of increases in depot and retail fuel prices.
The rally is also being driven by tightening global inventories. Oil traders note that crude stockpiles were already under pressure before the latest escalation in the Middle East, while earlier attacks on refining infrastructure in Russia had further constrained global supplies of diesel and other refined petroleum products. The combination of reduced inventories and heightened geopolitical risk has significantly increased the risk premium currently reflected in international oil prices.
Energy analysts say the direction of oil prices in the coming days will largely depend on three key factors: whether oil exports through the Strait of Hormuz remain uninterrupted, the scale of any further military escalation between the United States and Iran, and the response of major oil-consuming nations, particularly China, whose import demand continues to influence global market fundamentals.
With geopolitical tensions showing little sign of easing, traders expect volatility to remain elevated throughout the week. For Nigeria's petroleum industry, the coming days will be closely watched as policymakers, marketers and consumers assess whether the latest jump in international crude prices will translate into another round of adjustments across the country's downstream petroleum market.