Crude oil prices advanced on Friday and were positioned for their strongest weekly performance in months as renewed fighting between the United States and Iran revived concerns about disruptions across major Middle Eastern supply routes.
Brent crude oil, against which Nigerian crude oil is priced, rose to approximately $84.93 per barrel, while the United States West Texas Intermediate benchmark climbed to $79.76 per barrel.
The latest increase followed new American airstrikes near Iran’s southern coast and retaliatory Iranian drone and missile attacks against United States facilities in the Middle East.
Traders are particularly concerned that the conflict could affect crude movements through the Strait of Hormuz while extending into the Red Sea, another important route connecting Middle Eastern exports with European and global markets.
Reports that Iran had asked its Houthi allies to prepare for a possible obstruction of Red Sea shipping intensified the market reaction. However, there was no confirmation at the time of reporting that the route had been completely closed.
Oil markets frequently respond before physical supply is removed because refiners, traders and shipping companies must account for higher insurance costs, longer delivery times and the possibility that vessels will avoid dangerous routes.
The International Energy Agency has warned that global energy security could face serious pressure if disruption around the Strait of Hormuz persists.
The waterway normally handles about one-fifth of global energy shipments, making prolonged restrictions difficult to replace through emergency reserves and higher production elsewhere.
The rally will create different outcomes for oil-producing and oil-importing economies. Exporters could receive higher revenue for each barrel sold, while countries dependent on imported crude and petroleum products face rising inflation, transportation costs and pressure on their currencies.
For Nigeria, higher international prices could strengthen export earnings if the country maintains its recent production recovery.
Nigerian crude output averaged 1.56 million barrels per day in June, its highest level since 2020 and slightly above its OPEC allocation.
The benefit may not flow entirely to consumers. Rising crude prices increase feedstock costs for refiners and can lead to higher petrol, diesel and aviation-fuel prices.
That exposure has become more pronounced after the Dangote Petroleum Refinery started quoting local fuel products in dollars, citing insufficient crude supply under Nigeria’s naira-for-crude programme.
The refinery has had to source part of its requirements internationally, making its production costs more sensitive to crude prices and exchange-rate movements.
The immediate direction of the market will depend on whether the conflict produces measurable supply losses or remains primarily a threat to future shipments. Any confirmed obstruction of the Red Sea or further restriction of the Strait of Hormuz could push prices higher.
Conversely, diplomatic intervention or evidence that exports are continuing without major interruption could remove part of the risk premium accumulated during the week.