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LAGOS – Renewed hostilities between the United States and Iran have sent global crude oil prices to their highest level in about one month, a development that could provide a short-term revenue boost for Nigeria but also raises concerns over inflation and higher fuel costs.
Brent crude, the international benchmark against which Nigeria’s Bonny Light is priced, climbed 1.8 percent to $84.77 per barrel, while the U.S. benchmark, West Texas Intermediate (WTI), rose 1.6 percent to $79.40 per barrel as investors reacted to escalating tensions in the Middle East.
The latest rally followed renewed military exchanges between Washington and Tehran after the United States reinstated a naval blockade targeting Iran, intensifying fears over the security of the Strait of Hormuz, one of the world’s most strategic oil shipping routes.
Before the conflict, nearly 20 percent of global oil supplies passed through the Strait of Hormuz, making any disruption to the waterway a major risk to global energy markets.
For Nigeria, Africa’s largest crude oil producer, the rise in oil prices could strengthen government revenues, improve foreign exchange earnings and provide additional fiscal support for the 2026 budget, which relies significantly on crude oil exports.
The development also has the potential to bolster Nigeria’s external reserves and support the naira if elevated crude prices are sustained over a prolonged period.
However, economists warn that the benefits may be offset by rising import costs and inflationary pressures, especially if higher global oil prices translate into increased prices of refined petroleum products.
Although Nigeria now refines a significant portion of its fuel requirements locally, domestic pump prices remain closely linked to international crude oil prices and exchange rate movements.
Energy analysts said the renewed geopolitical tensions have once again placed global oil markets on edge after hopes had risen earlier this month that a ceasefire between the U.S. and Iran would stabilise energy supplies.
The conflict escalated after Iran reportedly launched missiles towards Jordan and Bahrain following fresh U.S. attacks on Iranian targets, while American forces carried out another round of strikes after Tehran announced the closure of the Strait of Hormuz.
Although U.S. President Donald Trump later clarified that the waterway remained open to international shipping except for Iranian vessels, reports of attacks near Oman renewed concerns about the safety of oil tankers operating in the Gulf.
Analysts at Ritterbusch and Associates said the renewed confrontation is likely to sustain upward pressure on crude prices as markets continue to price in supply risks.
Beyond the impact on oil prices, the conflict is also fuelling fears of another wave of global inflation.
Higher energy prices increase transportation and production costs worldwide, potentially forcing central banks to maintain tighter monetary policies for longer.
For Nigeria, which has only recently begun to witness a moderation in inflation, a prolonged rise in crude prices could complicate efforts to stabilise consumer prices, particularly if it leads to higher diesel, aviation fuel and petrol prices.
The latest developments also come as global markets await fresh data on U.S. crude inventories, with analysts forecasting another significant drawdown in stockpiles, a factor that could further tighten supply and keep oil prices elevated.
Market observers say while higher crude prices are generally positive for Nigeria’s oil-dependent economy, the country can only maximise the gains if it sustains crude production, curbs oil theft and increases exports to take advantage of favourable international prices.
With Brent crude approaching the $85 per barrel mark once again, investors will closely monitor developments in the Middle East, as any further disruption to global oil supplies could trigger another round of price increases, with significant implications for oil-producing economies such as Nigeria.
