Oil Price Surge May Push Petrol Costs Higher as Iran Conflict Deepens

Crude oil prices surged above $117 per barrel at the weekend, reaching their highest level since April, as markets reacted to fears of fresh United States military action against Iran and growing threats to energy infrastructure across the Middle East.

Nigeria’s crude benchmark, Brent, rose by about 3.5 per cent to cross the $117 mark during trading before easing to just above $116, still approximately 2.7 per cent higher. The rally underscored renewed anxiety among traders that the conflict, now in its eighth month, could further disrupt global crude supplies.

The development has renewed concerns in Nigeria that petrol prices could come under fresh upward pressure in the coming weeks. Although Nigeria produces crude oil, it depends heavily on imported refined petroleum products and refinery feedstock economics, meaning sustained increases in global crude prices typically raise the landed cost of petrol.

For the Dangote Petroleum Refinery and other domestic refiners, higher crude prices increase production costs, even where feedstock is sourced locally. For the Nigerian National Petroleum Company Limited (NNPC Ltd) and independent fuel importers, a stronger Brent price raises the cost of imported gasoline, freight, insurance and foreign-exchange exposure.

Since the removal of petrol subsidy and the move towards a more market-reflective pricing regime, changes in international crude prices, exchange-rate movements and shipping costs have been more quickly transmitted to pump prices. A prolonged Brent rally above $117 could therefore force marketers to review ex-depot prices, with possible flow-through to retail stations across the country.

The price surge followed reports that Washington was considering fresh military strikes against Iran after the November 3 midterm elections. Traders fear that an escalation could extend the conflict and place additional pressure on shipping routes, refineries and oil installations in the Gulf region.

Iran has warned that it would attack oil facilities, undersea cables, data centres and artificial intelligence infrastructure across the Gulf if the United States and Israel launched a new offensive. The threats have added to concerns about the vulnerability of critical energy and digital infrastructure in one of the world’s most important oil-producing regions.

Brent crude traded at about $72 per barrel in February, before the war began, but climbed to about $126 per barrel by the end of April as the conflict intensified and supply-security concerns mounted. The latest movement above $117 represents another sharp escalation in market sentiment.

Tensions rose further during the week after Iran’s Islamic Revolutionary Guards Corps (IRGC) claimed it struck four commercial vessels in the Strait of Hormuz on Wednesday. The strategic waterway remains a major artery for global oil shipments, and any sustained disruption there could have far-reaching consequences for prices and supply chains.

The United States also ordered some diplomats and family members of American government employees to leave Saudi Arabia, which has continued to face attacks by Houthi rebels operating from Yemen. The evacuation order added to the sense of regional instability weighing on energy markets.

For Nigerian households and businesses, the immediate risk is higher transport costs, which could feed into food prices, logistics charges and the general cost of living. Manufacturers, airlines, distribution companies and small businesses that rely on petrol or diesel for operations may also face increased energy expenses if product prices adjust upward.

However, the impact on petrol prices will depend on several factors, including the naira exchange rate, the availability of locally refined products, marketers’ inventory levels, government policy and the duration of the geopolitical tension. A short-lived price spike may be absorbed without a major pump-price adjustment, but a sustained rally could make an increase more likely.

With Brent above $116 and Middle East risks unresolved, oil markets are likely to remain volatile in the coming weeks. For Nigeria, the central question is whether higher crude prices will translate into stronger oil revenue without imposing a fresh burden on consumers through higher petrol prices.