Oil prices jump amidst renewed US-Iran hostilities

Efforts by governments around the world to ease pressure on consumers through lower fuel prices have suffered a setback as global crude oil prices surged following renewed military tensions involving the United States and Iran, pushing Brent crude to $79 per barrel. The sharp increase in oil prices comes at a time when many countries, […]

Efforts by governments around the world to ease pressure on consumers through lower fuel prices have suffered a setback as global crude oil prices surged following renewed military tensions involving the United States and Iran, pushing Brent crude to $79 per barrel.

The sharp increase in oil prices comes at a time when many countries, including Nigeria, are seeking ways to reduce the burden of high petrol prices on households and businesses.

Rising crude prices typically translate into higher costs for refined petroleum products, making it more difficult for governments and marketers to lower pump prices.

Brent crude, the international benchmark for oil prices, climbed to $79 per barrel during intra-trading before settling at $78 yesterday.

This followed reports of fresh military escalation, raising fears that the conflict could disrupt oil production or threaten key shipping routes in the Middle East.

Energy markets reacted swiftly as traders priced in the increased geopolitical risk. Although there has been no confirmed disruption to oil production, analysts said the possibility of a wider regional conflict has added a fresh risk premium to crude prices.

The Middle East accounts for a significant share of global oil production and exports. Any threat to production facilities, export terminals or major shipping lanes such as the Strait of Hormuz can trigger sharp movements in oil prices, even before actual supply disruptions occur.

The US Military hit over 80 Iranian interests on Tuesday over alleged attacks on ships transiting the Strait of Hormuz, the shipping route responsible for one-fifth of global fuel supply. The Hormuz has been a subject of controversy since the Iran war started.

The latest rise in crude prices represents a challenge for countries hoping to benefit from lower international oil prices.

In Nigeria, where petrol prices are closely linked to global crude prices and foreign exchange rates, sustained increases in Brent crude could slow or reverse recent efforts aimed at reducing pump prices.

The federal government during the week met with Dangote Refinery and oil marketers on the need to ensure a fair pricing to reflect the drop in crude oil prices which came down to $70 per barrel until day before yesterday.

 

…Improved local refining solution for Nigeria – Expert 

Oil and gas analyst, Dr. Marcel Okeke said what is in the best interest of Nigeria is to have a very competitive and vibrant local refining capacity.

According to him, there should be more refineries locally with capacity to export like Dangote Refinery.

Okeke said this is the only solution to hedge against global supply disruption as the US-Iran crisis indicated.

He said, “What is dictating what is happening here is beyond the government. As long as we keep importing refined products from outside, any day Trump wakes up and comes up with a new day, it changes everything again. Now you can see that the crude price has gone up.

“This is the time that the government is forcing people who have imported and refining here to sell at a certain price so that people can begin to get well. The price of PMS was around N800 before the end of February when the US-Israel and Iran crisis started. Now the government is saying let the price come back to that level and now this is happening again.

“So the ultimate is improved refining capacity in Nigeria. Government should expedite action in fixing its refineries in Port Harcourt, Warri and Kaduna. What the government is trying to do is also beyond it because external factors have proven it is not possible in the current scenario.”