Global crude oil prices surged on Thursday, with Brent crude rising above $107 per barrel for the first time since May as traders braced for a potentially prolonged supply shock linked to the ongoing Iran war.
Brent, the global oil benchmark, climbed 6.1 per cent to trade at $107.40 per barrel, while US crude gained 6.2 per cent to hit $102 per barrel, also its highest level since May.
Oil prices have risen above the $100 mark this week amid intensified fighting around the Strait of Hormuz and the Red Sea. The United States and Iran have exchanged strikes, while Iran-backed Houthi rebels have attacked Saudi Arabia, further heightening tensions around the Bab el-Mandeb Strait.
The developments have raised concerns about possible disruptions to global crude supplies and the movement of oil through the Strait of Hormuz, one of the world’s most important energy shipping routes.
In Nigeria, the global oil market pressure has coincided with rising domestic fuel prices. Diesel, also known as Automotive Gas Oil, has reached about N2,000 per litre in some locations, while petrol prices have climbed above N1,400 per litre in parts of the country.
The increases are adding to the financial burden on businesses and households, particularly manufacturers, transport operators and other users that rely heavily on petroleum products for power generation and mobility.
Higher energy costs are also raising concerns over renewed increases in transportation and production expenses, with businesses potentially passing additional costs on to consumers through higher prices for goods and services.
The latest increase in domestic fuel prices comes despite growing refining capacity in Nigeria, underscoring the continued influence of crude supply, distribution costs, market conditions and other factors on petroleum product prices.
Jason Tuvey, deputy chief emerging markets economist at Capital Economics, said the escalation of attacks around the Strait of Hormuz and by the Houthis against Saudi Arabia suggested that Iran and its proxies were seeking to regain the initiative in the conflict.
“This could set back the recovery in oil output in the Gulf and raises the risk that global energy prices rise even further in the coming weeks,” Tuvey said in a note.
Meanwhile, S&P Global Energy said it no longer expects Middle East oil production to return to pre-war levels by the end of next year.
The firm has also revised its outlook, saying it no longer assumes a definitive end to the conflict or a return to normal conditions in the Strait of Hormuz by the end of 2027.
S&P Global Energy now expects crude oil prices to remain elevated within the $80 to $100 per barrel range through next year.
The sustained rise in oil prices is also heightening concerns about inflation and the possibility of further interest rate increases by central banks, with potential implications for global bond and stock markets.
