Global crude oil prices have surged sharply, rising over 15% since early June, as escalating conflict between Israel and Iran, now involving direct U.S. military strikes, has stoked fears of major supply disruptions. Brent crude, the international benchmark, climbed from around $70 per barrel before the conflict intensified to a peak of $81.40 on June 22, 2025, before moderating slightly to about $77 on June 23.
The tension intensified after coordinated US-Israeli airstrikes targeted key Iranian nuclear facilities, prompting Iran to vow retaliation and move to close the Strait of Hormuz, a critical choke point through which nearly 20 per cent of the world’s oil passes.
Iran, the third-largest crude producer within OPEC, warned that the U.S. attacks broadened the scope of legitimate military targets, further heightening regional tensions. This geopolitical uncertainty has injected volatility into oil markets, with prices oscillating but maintaining elevated levels compared to pre-conflict benchmarks.
The Israel-Iran conflict has triggered a sharp surge in crude oil prices, with Brent crude poised for further gains. The potential closure of the Strait of Hormuz and ongoing hostilities pose a serious threat to global energy supply stability, prompting warnings from major financial institutions and energy analysts worldwide.
Brent crude, the global benchmark, has jumped sharply, with Goldman Sachs warning that prices could spike to $110 per barrel if the Strait of Hormuz remains closed or if regional oil production is broadly disrupted. The investment bank projects Brent could average $95 per barrel in the last quarter of 2025 amid ongoing geopolitical risks.
The surge in crude prices is already impacting fuel costs worldwide. In Nigeria, energy analysts warn that petrol prices could soar to as high as N1,000 per litre if Brent crude hits $80 per barrel, driven by rising crude prices and foreign exchange volatility.
Market analysts highlight the fragile situation, noting that while there is no confirmed large-scale supply disruption yet, the risk premium on oil prices has significantly increased as traders price in the possibility of further conflict escalation or supply chain interruptions.
Meanwhile, a new report by Goldman Sachs warns that Brent crude could climb as high as $110 per barrel if Iran blocks the Strait of Hormuz.
The investment bank projects this scenario could unfold if oil shipments through the critical waterway are halved for a month and remain 10 percent below average for nearly a year.
While Goldman notes that this is a specific and less likely outcome, the bank believes some level of disruption to oil flows in the Middle East is increasingly probable.
In this scenario, Brent prices are expected to spike initially before stabilising at around $95 per barrel in the final quarter of 2025, the analysts said, as reported by Reuters.
This marks a significant revision from the bank’s forecast just a week earlier, when it anticipated a geopolitical risk premium of about $10 per barrel, with prices potentially exceeding $90 if Iranian crude supply were disrupted.
Citing data from the prediction platform, Polymarket, Goldman estimates a 52 percent probability of Iran closing the Strait of Hormuz.
In contrast, the chance of the United States formally declaring war on Iran before the end of the month remains low at just 2 percent, according to the same platform.
Oil markets responded modestly to the latest developments, with Brent crude trading above $78 per barrel and West Texas Intermediate (WTI) at $75.24 at the time of writing.
“A spike in oil prices is anticipated. Even without immediate retaliation, markets are likely to factor in a heightened geopolitical risk premium,” said Jorge Leon, head of geopolitical analysis at Rystad Energy.
An analyst at UBS, Giovanni Staunovo added, “The direction of oil prices will now depend on whether supply disruptions materialise, which would push prices higher, or if tensions ease, causing the risk premium to decline.”
For Nigeria, the continued rally in crude prices offers a welcome boost to foreign exchange (FX) inflows and fiscal revenues.
Analysts also noted that this could help ease short-term pressure on the naira, which has lost some value recently despite the introduction of a more flexible exchange rate regime earlier this year.
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