Nigerian crude posted its best monthly increase (58 percent) and approached $120 per barrel in early March following disruptions in the Strait of Hormuz.
Nigerian Bonny Light traded at about $70 per barrel at the start of the month.
It reached its highest level since June 2022 during the first nine days, with an intraday high of $119.5 per barrel
The market had priced in the possibility of a complete energy blockade in the Middle East, making Nigerian crude a significant geopolitical risk premium.
European refiners, in urgent need of light, sweet crude to replace lost Middle Eastern supplies, often traded Nigerian grades like Bonny Light at a premium to Brent during this period, reaching $112–$122 a barrel.
Nigeria’s situation has involved a mix of steady internal production challenges and windfall revenues. As some “tanker-on-water” inventory entered markets and diplomatic channels opened, prices have fallen from the $120 peak.
Still, Nigeria is struggling to meet its ambitious 2026 budget target of 1.84 million barrels per day, with current production between 1.46 and 1.48 million barrels daily.
Nigeria fell short by 16.6 million barrels compared to budget projections, a 9% decrease from January in the first two months of 2026. Dangote Refinery frequently adjusts gantry prices to keep pace with the crude rally, causing domestic petrol prices in places like Abuja to range from N1,331 to N1,430 per liter.
Recent Market action showed Nigerian crude recovered some of its daily losses from Tuesday after falling towards the $102 per barrel mark, when unverified media reports suggested Iran’s president was ready to end the war.
Crude Oil Market remains parabolic amid high geopolitical uncertainty
President Donald Trump told reporters that the U.S. could end the military campaign in two to three weeks. This marked his most explicit statement to date, indicating a desire to end the month-long conflict.
- The market’s reaction had been subdued due to expectations of a brief conflict since a fifth of the world’s liquefied natural gas and crude oil passes through the Strait of Hormuz, where maritime traffic has nearly stopped, but Trump’s insistence on Iran’s surrender suggests the potential for a prolonged confrontation.
- However, analysts believe that infrastructure damage could cause persistent supply shortages even if the conflict ends.
President Trump also suggested that he might end the conflict before reopening the Strait of Hormuz, a critical route handling 20% of global LNG and oil trade.
- A Reuters survey released Tuesday showed OPEC’s oil output fell by 7.3 million barrels per day in March from the previous month, reflecting the impact of forced export cuts due to Hormuz’s closure. The same survey indicated that analysts raised their annual oil price forecasts significantly between February and March due to the Strait’s blockage and production disruptions.
- Specifically, the March forecast predicts Brent crude will average $82.85 per barrel in 2026, roughly 30% higher than February’s forecast of $63.85 before the war started.
The ongoing threat of high energy prices has heightened concerns of a new inflation spike, which could constrain central banks’ ability to cut interest rates and support growth.
The likelihood of a major inflationary impact increases with the length of time that vital energy infrastructure and shipping routes in the area are impacted.
- Meanwhile, a US-run oil field was forced to halt production due to attacks in northern Kurdistan and southern Iraq. Additionally, Kuwait has begun reducing production due to a shortage of petroleum storage space, reports the Wall Street Journal.
President Trump earlier promised to protect ships passing through the Strait of Hormuz, but shipping companies remain cautious.
According to JPMorgan analysts, Trump’s promise helped “reduce some of the risk premium in oil markets,” but they noted it would have “limited impact unless Iran’s extensive disruption capabilities are first neutralized.”
