Oil prices rose by about 2% on Friday as renewed Houthi attacks on Saudi-linked shipping heightened concerns over regional supply disruptions, while uncertainty over the proposed reopening of the Strait of Hormuz kept traders on edge.
As at 08:30 (WAT), Brent crude was trading at $83.80 per barrel, up 1.59%, while WTI crude stood at $78.32 per barrel, up 1.33% pointing to broad strength across major crude benchmarks.
The latest gains followed claims by Yemen's Iran-aligned Houthi group that it had carried out a missile attack on the Saudi oil tanker in the Red Sea. The development renewed concerns over the safety of energy shipments through the region.
Shipping activity through the Strait of Hormuz and the Bab el-Mandeb Strait also fell sharply on Wednesday. Reuters reported that only two vessels crossed Hormuz, down from eight the previous day, while Kpler data showed only one commodity vessel passed through Bab el-Mandeb, compared with 20 on Tuesday.
The decline highlights the continuing vulnerability of global oil supplies to disruptions along key maritime routes. The Strait of Hormuz is particularly important because a substantial share of global oil and LNG shipments traditionally passes through the waterway.
At the same time, expectations of a deal between Iran and Oman to establish arrangements for shipping through Hormuz remain uncertain. Iran's Foreign Ministry spokesman, Esmaeil Baghaei, said discussions were in their final stages, but the proposed framework has yet to restore normal vessel movements.
Reports that Iran could restrict vessels considered hostile and impose compensation requirements on ships using the waterway have added to uncertainty. Iran is seeking transit fees equivalent to 5%–7% of the value of cargoes using the Strait of Hormuz, while Oman has proposed a lower charge of about 3%. The United States, however, has rejected any arrangement that would require vessels to pay transit fees to Iran, arguing against charges for passage through the strategic waterway. The differences over fees and the conditions for passage could make any reopening a controlled process rather than an immediate return to normal shipping.
The Houthi attacks have therefore complicated the market's expectations of easing geopolitical risks. Any further attacks on tankers or energy infrastructure in the Red Sea, Gulf or surrounding waters could increase the risk premium attached to crude prices.
For oil traders, the immediate focus remains on two competing developments: whether Iran and Oman can reach a workable arrangement for Hormuz shipping and whether attacks on commercial vessels in the Red Sea escalate. A successful agreement could ease prices, while further disruptions could push crude higher.
For Nigeria, sustained higher crude prices could support upstream revenues and government oil earnings, but prolonged shipping disruptions could also increase freight, insurance and refined-product replacement costs. This could have implications for domestic petroleum pricing if higher international costs persist.