The global crude oil market approached a tipping point, with Nigerian crude projected to hit $100 this month.
Nigerian Bonny Light last traded above $90 a barrel, up by about a third this week.
The federal government’s revenue is expected to rise sharply, as the 2026 budget was set at a much lower $64.85 per barrel.
However, Nigeria, being an importer of refined fuels despite Dangote’s refinery’s production uptick, will likely face high domestic fuel prices and inflation.
Dangote Petroleum Refinery has implemented several significant price increases this week in correlation with the price volatility of the global oil market. The price of petrol has increased to N995 per litre at the Dangote refinery gantry.
Africa’s largest refinery has raised prices twice, totalling N221 in less than a week.
- Brent crude prices surged above $92 per barrel on Friday, extending gains to over 27% this week amid signs emerged that the initial calm in the oil market had evaporated.
- Market participants warned that the global energy market remained too complacent about the risks of a prolonged closure of the Strait of Hormuz. They warned that without de-escalation of hostilities; prices could hit $100 within days.
Physical energy markets are already showing stress, with diesel and jet fuel skyrocketing due to refinery cuts in the Middle East and Asia.
Israel/U.S-Israel conflict distorts crude oil market
The main factor driving this is the escalation of the Iran conflict. Nearly all shipping at the Strait of Hormuz has come to a halt, with Iran threatening to “set fire” to ships attempting to cross, risking 20% of the world’s oil supply.
- The number of available oil supertankers in the Gulf has reduced, and maritime traffic through the strait has nearly stopped, intensifying the need to cut further production.
- Signatures of strain are already evident in physical energy markets, with rising costs for jet fuel and diesel driven by refinery shutdowns in Asia and the Middle East. Oil prices remain below those seen in previous crises, even after one of the largest disruptions to global energy markets in recent history.
- Many energy executives and traders warn that every day the war continues, the world inches closer to a tipping point; some predict crude could reach $100 within days. Shipping traffic through the Strait of Hormuz has almost entirely stopped.
Iran has launched missile attacks on energy facilities in the UAE, Saudi Arabia, and Qatar, which will lead to further tightening of supplies.
If the Strait remains blocked for several weeks, JPMorgan and Goldman Sachs forecast prices could exceed $100 and even reach $150 by summer’s end. Former White House official Bob McNally, president of Rapidan Energy Group, says the market is still adjusting to the potential duration of Hormuz’s closure.
President Donald Trump tries to calm the crude oil market
President Donald Trump, who claimed he can influence fuel prices, is struggling with rising costs. Gasoline prices are higher now than at any point during his presidency.
- The White House made several unsuccessful efforts to calm down the oil markets. When energy flow from the Gulf resumes is a key concern for traders, as tanks fill up daily when oil cannot pass through Hormuz, forcing producers to cut output. Qatar stopped LNG production this week, and Iraq is reducing its output.
- Clearly, the market’s future depends on how the conflict unfolds; any sign of hostilities ending or Hormuz reopening would cause oil prices to fall sharply again. Trump announced that the US would provide naval escorts and insurance guarantees to ensure the safe passage of oil tankers through Hormuz.
This announcement came on the last day of the reporting period for data collected by the Commodity Futures Trading Commission and ICE Futures Europe, which showed traders had reduced their long positions on WTI and Brent at the start of the week.
The initial cautious market reaction reflected traders’ belief that the conflict would be limited and surgical, causing a quick spike in prices followed by a rapid retreat, reinforced by their expectation that the Trump administration would intervene with a last-minute policy to lower energy costs.
