A fresh increase in petrol prices may be looming in Nigeria as Brent crude surged to $107 per barrel on Thursday from about $100 the previous day, raising concerns over higher domestic fuel costs.
The latest rally has intensified pressure on the Nigerian downstream petroleum market, where petrol prices have already climbed from about ₦830 per litre before the Middle East crisis to ₦1,310 or more in some parts of the country.
Before the crisis erupted on February 28, international crude prices were below $69 per barrel. However, disruptions to global oil supplies have since pushed crude prices sharply higher.
The development has prompted the Dangote Petroleum Refinery and fuel importers to review their pricing as the cost of crude and other supply-related expenses increases.
According to Oilprice.com, Brent crude gained more than five per cent in early trading on Thursday after crossing the $100 mark earlier in the week.
West Texas Intermediate also climbed above $100 per barrel as the continuing confrontation between the United States and Iran heightened fears of further disruptions to global crude supplies.
The latest surge in crude prices has been largely linked to a sharp decline in oil shipments through the Strait of Hormuz, one of the world’s most important oil transit routes.
Oilprice.com reported that crude flows through the strategic waterway had fallen below two million barrels per day, compared with between six million and nine million barrels per day previously.
Shipping trackers have also recorded a significant reduction in tanker movements through the strait, with no very large crude carrier reportedly exiting the waterway since early September.
The disruption has intensified following attacks on tankers and commercial vessels in the Persian Gulf and surrounding waters.
Iran has claimed responsibility for attacks on several ships, while the United States has confirmed the destruction of some Iranian oil tankers.
With neither side indicating an immediate ceasefire, traders are increasingly pricing in the possibility of prolonged disruption to global oil supplies.
Analysts said the uncertainty had forced oil traders to reassess the risks surrounding global crude supplies, with physical crude prices already moving above $100 per barrel in recent sessions.
READ ALSO: Air Peace warns revenue deductions threaten aviation investment, airline survival
Oil futures have also followed the upward trend as inventories tighten and alternative export routes face heightened security risks.
For months, increased tanker traffic through the Strait of Hormuz had eased concerns over supply disruptions. The reversal of that trend has now renewed fears of a prolonged supply squeeze.
For Nigeria, the development could have significant implications for petrol prices, particularly as domestic fuel prices remain sensitive to international crude prices and supply costs.
A sustained increase in global crude prices could therefore raise the cost of petrol supplied by refiners and importers, potentially forcing another round of pump price increases across the country.
