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Oil Hits $100 on Middle East Escalation, Threatening Global Supply
Global crude oil prices have surged past $100 per barrel, hitting their highest level since July, as rising military tensions in the Middle East spark fears of disruption to oil production and shipping routes.

Brent crude, the international benchmark for Nigeria’s oil, jumped 2.8% on Wednesday to cross the $100 mark, while U.S. West Texas Intermediate (WTI) rose 2.9% to $95.70 per barrel. Both benchmarks are now up over 60% from the start of the year.

The rally was triggered by fresh escalation in the Gulf, including reported strikes on Iranian oil tankers in the Gulf of Oman and near Kharg Island, a major Iranian export terminal. There were also reports of attempted missile attacks on a U.S. Navy warship and attacks by Iran-backed Houthi forces on Saudi oil infrastructure.

The developments have put markets on edge due to the strategic importance of the Strait of Hormuz — the narrow waterway between Iran and Oman through which a large share of the world’s seaborne oil trade passes. Producers like Saudi Arabia, Iraq, UAE, Kuwait and Qatar depend heavily on the strait.

Analysts note that even the threat of disruption is enough to drive prices up, as traders price in potential shortages.

The surge threatens to ripple through the global economy. Crude is a key input for petrol, diesel, jet fuel, manufacturing, agriculture and logistics. In the U.S., average petrol prices rose 7.3 cents in a single day to $4.22 per gallon — the biggest daily jump since May — while diesel hit a record $5.94, according to AAA data.

Saxo Bank’s Head of Commodity Strategy, Ole Hansen, said: “The combination of expensive diesel, jet fuel, bunker fuel and natural gas is particularly uncomfortable for consumers around the world, who see their disposable income shrinking.”

Mixed Fortunes for Nigeria

For Nigeria, the rally presents both opportunity and risk. Higher prices could boost export earnings, government revenue, external reserves and support for the naira, if production levels are sustained.

However, Nigeria’s ability to benefit depends on overcoming long-standing challenges including crude theft, pipeline vandalism, ageing infrastructure and production disruptions. Higher prices cannot fully compensate for low export volumes.

Domestically, sustained high global prices could also raise the cost of imported petroleum products and pressure local fuel prices, even as it improves the economics for large-scale domestic refineries.

The price direction now hinges on whether tensions around the Strait of Hormuz escalate or shipping remains uninterrupted. Markets also fear a renewed inflation shock that could force central banks to keep interest rates higher for longer. The S&P 500 fell 0.3% on Wednesday on those concerns.
Source: The Sun Nigeria