Oil prices now $74/b as Israel-Iran hostilities escalate

Rising tensions between Israel and Iran have severely damaged critical oil infrastructure, triggering a sharp spike in global oil prices, Daily Trust can report. Brent crude increased by 11.71% from $66.45 last Monday to $74.23 as of yesterday after hitting an intraday high of $78.50, the highest since January 27. Also over the weekend, U.S. […]

Rising tensions between Israel and Iran have severely damaged critical oil infrastructure, triggering a sharp spike in global oil prices, Daily Trust can report.

Brent crude increased by 11.71% from $66.45 last Monday to $74.23 as of yesterday after hitting an intraday high of $78.50, the highest since January 27.

Also over the weekend, U.S. West Texas Intermediate crude finished at $72.98 a barrel, up $4.94, or 7.62%.

According to Reuters, during the session, WTI jumped over 14% to its highest since January 21 at $77.62. WTI climbed 13% to its level a week ago.

Israel and Iranian hostilities have worsened volatilities in the oil and gas sector as investors are on the edge of price instability amidst fear of escalating Middle East conflict.

“So far we are at a stage of ‘controlled confrontation’”, said Lombard Odier’s chief economist Samy Chaar, in an interview with Reuters.

“For now, you get spikes in the oil price, you get volatility, everyone’s a bit nervous, but there is no clear sign that we’re moving towards the no-return type of scenario,” he said.

 

Implications for Nigeria

Global oil market disruption is often felt in Nigeria, a major oil producing nation and a key member of the Organisation of Petroleum Exporting Countries (OPEC).

There have been concerns in Nigeria over falling oil prices with its attendant effect on the federal government’s revenue projections.

While President Bola Tinubu benchmarked the 2025 budget at $75 per barrel, the oil prices once crashed below $60, raising concerns about increasing budget deficit.

While oil prices traded above Nigeria’s 2025 budget projection on Friday, it fell to $74 as of yesterday, slightly below the benchmark and close to the benchmark.

Still analysts say efforts must be geared towards increasing production to edge against the expected price volatility in the course of the year.

 

Surge in energy prices expected – Muda Yusuf

Chief Executive Officer, Centre for the Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf said, “With the outbreak of the Israeli-Iranian war, crude oil prices had surged to $75 per barrel from $65 per barrel a week before. This is a 15% jump within days.

“This has obvious implications for petroleum product prices globally.  Economies around the world [Nigeria inclusive] would witness a surge in the price of petrol, diesel, jet fuel, gas and related products in the near term. This would have far reaching implications for many economies and businesses.”

According to him, it would also worsen inflationary pressures.

Yusuf in a statement said, “Energy cost is a major factor in the Nigerian inflation equation.    It impacts production cost, logistics cost, transportation costs, and the cost of power generation. This presents an inflationary scenario. These additional costs would be passed on to final consumers, depending on the degree of consumer resistance.

“There is also a global inflation dimension.  Energy prices have global inflationary implication.  Therefore, there is also an expectation of imported inflation in the unfolding geopolitical scenario.”

The economist further explained that the surge in crude oil price would impact on foreign exchange earnings, oil being the biggest forex earner for the country.

“This would even be more impactful if output performance improves.  Crude oil price has surged to $75 per which is about 15%  higher than before the outbreak of the Israeli–Iran conflict. This development would also positively impact the country’s foreign reserves, ensure better forex liquidity and ultimately the stability of the naira exchange rate.

“An improvement in crude oil price would therefore have a significant impact on government revenue. An improvement in revenue would positively impact fiscal consolidation and hopefully moderate the growth of the fiscal deficit.

“Investments in the oil and gas sector would post better returns if the conflict persists.  High oil price is good news for upstream oil and gas investors.”

Meanwhile, JP Morgan at the weekend said it is sticking to its base-case oil price forecast for 2025, projecting Brent crude will trade in the low-to-mid $60s.

In a note, the bank said it sees oil averaging $60 in 2026, but flagged $120–$130 per barrel as a potential range in the event of worst-case outcomes—namely, military conflict and a closure of the Strait of Hormuz, through which one-fifth of global oil flows.

JP Morgan noted that while such escalations could lead to meaningful supply disruption, particularly if Iran’s 2.1 million bpd of exports are cut off, its base case still assumes diplomacy holds.