International crude oil prices have climbed to $107 per barrel, raising fresh concerns that petrol prices in Nigeria could increase further as refiners and importers adjust to rising global supply costs.
Brent crude rose from about $100 per barrel on Wednesday to $107 on Thursday, adding to pressure on the domestic downstream petroleum market, where petrol prices have already increased significantly since the outbreak of the Middle East conflict.
Pump prices, which were around N830 per litre before the crisis, have risen to about N1,310 or higher in some parts of the country.
Before the conflict erupted on February 28, international crude was trading below $69 per barrel. However, disruptions to global oil supplies and shipping have since triggered a sharp rally in crude prices, forcing refiners and petroleum marketers to review their pricing.
The latest development has heightened fears of another round of petrol price increases in Nigeria, particularly as the United States-Iran conflict continues to affect the movement of tankers through the strategically important Strait of Hormuz.
According to Oilprice.com, Brent crude crossed the $107 per barrel mark on Thursday amid continuing military hostilities between the United States and Iran and growing concerns over reduced crude supplies.
The benchmark recorded a gain of more than five per cent in early trading, extending a rally that had already pushed oil prices above $100 earlier in the week.
West Texas Intermediate crude also moved beyond $100 per barrel as concerns mounted that the conflict could further restrict global oil supplies.
A major factor behind the latest price surge is the sharp reduction in crude oil shipments through the Strait of Hormuz.
Oilprice.com reported that oil flows through the waterway, which had recovered to between six million and nine million barrels per day in previous weeks, had dropped substantially, with recent estimates putting daily outflows at less than two million barrels.
The decline in tanker traffic has added to the pressure on an already volatile global oil market.
Shipping trackers also indicated that no very large crude carriers had left the strait since the beginning of September, representing a significant drop from the level of tanker activity recorded during the brief period of relative stability.
The situation has been further complicated by attacks on tankers and other 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. Neither side has indicated that a ceasefire is imminent, fuelling expectations that the confrontation could persist for weeks or potentially longer.
The prolonged uncertainty has prompted market analysts and traders to reassess the risks to global crude supplies.
Physical crude benchmarks have moved above $100 in recent trading sessions, while futures prices have also followed the upward trajectory amid concerns over tightening inventories and the vulnerability of alternative export routes to further attacks.
For several months, an improvement in tanker movements through the Strait of Hormuz had helped ease fears of a prolonged supply disruption and limited upward pressure on crude prices. That situation has now reversed.
With crude flows through the strategic waterway significantly reduced and no immediate diplomatic breakthrough in sight, international markets are increasingly factoring in the possibility of a prolonged disruption to one of the world’s most critical oil transit routes.
The development could have direct implications for Nigeria, where petrol prices are sensitive to movements in international crude prices and associated supply costs.
If the surge in crude prices persists, domestic refiners and fuel importers may be compelled to review their prices upward, potentially translating into another increase in petrol pump prices across the country.
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