Petrol prices in Nigeria could come under fresh upward pressure following a sharp rise in international crude oil prices, with Brent crude climbing to $107 per barrel on Thursday from around $100 the previous day.
The latest surge in global oil prices has intensified concerns over domestic petrol costs, which have already risen from about N830 per litre before the Middle East crisis to N1,310 or higher in some parts of the country.
Before the crisis erupted on February 28, crude oil was trading below $69 per barrel. But disruptions to global oil supplies since then have sent prices higher, forcing the Dangote Petroleum Refinery and petroleum importers to review their prices.
With Brent now trading above $107 per barrel and the ongoing US-Iran conflict affecting tanker movements through the Strait of Hormuz, marketers and analysts warned that Nigerian motorists could face another increase in petrol prices.
Oilprice.com reported that Brent rose to $107 per barrel on Thursday as the prolonged military confrontation between the United States and Iran continued to affect crude shipments through the Strait of Hormuz.
The international benchmark gained more than five per cent in early trading, extending the rally that took prices beyond the $100 mark earlier in the week. West Texas Intermediate also crossed $100 per barrel as concerns mounted over the possibility of prolonged supply disruptions.
The latest rally was largely linked to the steep drop in crude flows through the Strait of Hormuz. According to Oilprice.com, daily volumes that had recovered to between six million and nine million barrels in recent weeks had fallen significantly, with current estimates placing outflows below two million barrels per day.
Shipping trackers also indicated that no very large crude carriers had passed out of the strait since early September, representing a major reduction in tanker activity compared with the period of relative calm.
The situation has been further complicated by attacks on tankers and commercial vessels in the Persian Gulf and surrounding waters. Iran said it had hit several ships, while the United States confirmed that some Iranian oil tankers had been destroyed.
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Neither side has indicated that a ceasefire is imminent, with official statements pointing to the possibility of the confrontation lasting for weeks or even longer.
Analysts said the lack of a clear route towards de-escalation had compelled traders to reassess the risks to global crude supplies.
Physical crude benchmarks had already crossed the $100 threshold in recent trading sessions, while futures prices also followed as inventories tightened and alternative export routes came under greater threat of attacks.
The earlier recovery in tanker movements through the Strait of Hormuz had helped ease upward pressure on crude prices for months. However, the sharp decline in oil flows has now reversed that trend.
As crude movements through the strategic waterway remain severely constrained and there is no clear diplomatic settlement in sight, global markets are increasingly factoring in the possibility of a prolonged disruption to one of the world’s key oil transit routes.
In Nigeria, any sustained rise in international crude prices could translate into higher petrol costs as domestic refiners and importers adjust their prices to reflect changes in global crude prices and associated supply expenses.