Oil prices rose on Thursday, extending gains for a third consecutive day as concerns grew that the United States could take military action against Iran—a key Middle Eastern oil producer—potentially disrupting regional supplies.
Brent crude futures rose by 94 cents, or 1.4 per cent, to $69.34 a barrel by 07:30 GMT, Reuters reported. US West Texas Intermediate (WTI) crude also jumped 1.5 per cent to $64.13 per barrel.
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Both benchmarks have trended upward since trading opened on Monday, gaining about five per cent— their highest levels since 29 September last year.
“The main driver of oil prices remains geopolitical risk premium surrounding Iran and the Middle East, though unplanned outages in Kazakhstan and U.S. (Winter Storm Fern) has had a temporary impact as well,” DBS Bank’s energy sector team lead, Suvro Sarkar, was quoted to have said in an email.
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Rising threats of US–Iran military action have led analysts to project that oil prices may remain high amid heightened geopolitical risks, US restrictions on Russian oil purchases, and sustained Chinese demand, even as markets entered the year expecting a large oversupply.
Implications for Nigeria
With Brent crude trading around $69 per barrel—above Nigeria’s 2026 federal budget benchmark of $64.85—the price rally would ordinarily bolster the country’s fiscal revenues and foreign exchange reserves.
However, Nigeria’s current output of about 1.5 to 1.6 million barrels per day (bpd) remains below its 2 million bpd capacity target, limiting the country’s ability to fully benefit from supply disruptions linked to U.S.–Iran tensions.
At the same time, Nigeria’s deregulated downstream sector means that higher international crude prices are quickly transmitted to domestic fuel prices.
On Thursday, the Nigerian National Petroleum Company (NNPC) quietly adjusted petrol pump prices nationwide, less than 24 hours after Dangote Refinery announced an increase in its gantry price of petrol from N699 per litre to N799 per litre.
While higher oil prices could raise government revenues, broader economic uncertainty and rising import costs—exacerbated by global shipping disruptions—risk worsening inflation, projected to reach 37 per cent in 2026, and placing additional pressure on Nigeria’s local currency, naira.
Some analysts have warned that a full-scale conflict disrupting the Strait of Hormuz—a chokepoint for about 20 per cent of global oil flows—could send Brent prices surging to $91 or even $150 per barrel.
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In recent weeks, US President Donald Trump has intensified pressure on Iran to halt its nuclear programme, issuing threats of military strikes as a US naval group arrived in the region. While Nigeria is the largest oil producer in Africa, Iran is the fourth-largest producer in the Organisation of the Petroleum Exporting Countries (OPEC), with output of about 3.2 million barrels per day.
Mr Trump has also hinted that the United States is weighing options to target Iranian security forces and leaders to provoke protests that could destabilise the current regime, Reuters reported on Thursday, citing US sources familiar with the discussions.
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