The sharp rise in international crude oil prices could trigger another increase in petrol prices in Nigeria, with Brent crude climbing to $115.18 per barrel on Friday amid growing fears of renewed military strikes on Iran and further disruptions to global oil supplies.
The latest rally in crude prices comes as Dangote Petroleum Refinery and other depot owners sell petrol at N1350 at their gantries.
A further increase in the cost of crude could put additional pressure on domestic petrol prices, with marketers facing higher replacement costs and the possibility of passing the increases on to consumers.
According to Oilprice.com, Brent crude climbed to a five-month high on Friday as escalating tensions in the Middle East heightened concerns over global oil supplies, raising the prospect of another increase in petrol prices in Nigeria.
The international benchmark rose by 1.8 per cent to $115.18 per barrel, while United States West Texas Intermediate crude futures gained two per cent to $101.56 per barrel, amid growing expectations that Washington could resume military strikes on Iran in the coming weeks.
The rally comes as Nigerian consumers continue to grapple with elevated petrol prices, which affected inflationary pressure and heightened the cost of living.
Although no fresh increase has been announced by either refiners or importers, sustained increases in international crude prices usually put further pressure on domestic petrol prices by raising feedstock and refined-product replacement costs.
CNBC reports that the latest oil price rally was driven by fears of a renewed military escalation involving the United States and Iran, alongside attacks on energy infrastructure and shipping routes in the Middle East.
Reuters reported on Friday that Brent crude had touched $115.16 per barrel, its highest level since May 4, as attacks by Houthi militants in Saudi Arabia heightened concerns about further disruption to energy supplies.
The report also highlighted the evacuation of Saudi Aramco’s headquarters in Dhahran amid intensifying regional fighting.
Brent futures were on course for a weekly gain of about five per cent, which would mark their third consecutive week of increases. WTI was also heading for a weekly gain, although its advance was considerably smaller.
The renewed concerns followed remarks by United States President Donald Trump on Wednesday that Washington was not negotiating with Iran and that something would happen “fairly soon”.
The comments came amid reports that US and Israeli officials were considering fresh strikes against Iran after the American midterm elections.
Iran’s army chief, meanwhile, said the country’s military was fully prepared for “asymmetric warfare” after strengthening its capabilities, according to the Iranian state media agency Tasnim.
The growing tensions have also extended to Saudi Arabia, where Iran-allied Houthi militants have continued attacks. The United States State Department ordered non-essential personnel to leave the country amid the security concerns.
A drone attack targeting the Shaybah oil field in Saudi Arabia’s Eastern Region on Wednesday reportedly killed two people and injured two others. Another attack on King Fahd International Airport in Dammam also left at least two people dead and eight injured, according to Saudi state media.
Reuters reported that Saudi Aramco had ordered staff to evacuate its Dhahran headquarters and work remotely following attacks by Iran-backed Houthi rebels.
The developments have raised fears of further disruption to crude production, exports and shipping across the Middle East, a region central to global energy supplies.
Of particular concern is the Strait of Hormuz, a strategic waterway through which a significant share of the world’s oil supplies normally passes. Disruptions to shipping through the strait have already contributed to market volatility, while renewed attacks could further tighten supplies and increase freight and insurance costs.
For Nigeria, higher international crude prices could feed into the cost of petrol supplied by domestic refiners and imported products, depending on their crude procurement costs, refining margins, logistics and prevailing market prices.
Dangote Petroleum Refinery, a major supplier to the domestic market, last announced an increase in its petrol gantry price from N1,265 to N1,350 per litre, effective 12 September.