Oil Prices Increase for Third Straight Day Amid US-Iran Tensions

On Thursday, oil prices climbed higher, marking a third consecutive day of gains, driven by escalating worries that the United States might initiate military action against Iran, a major oil-producing nation in the Middle East.

As of 07:30 GMT, Brent crude futures traded at $69.34 a barrel, reflecting a rise of 94 cents or 1.4 percent. Similarly, US West Texas Intermediate (WTI) crude saw an increase of 1.5 percent, reaching $64.13 per barrel, according to reports from Reuters.

Since the onset of trading on Monday, both crude oil benchmarks have surged by approximately five percent, achieving their highest prices since September 29 of the previous year.

DBS Bank’s energy sector team leader, Suvro Sarkar, indicated that geopolitical tensions—particularly surrounding Iran and the Middle East—are the primary factors propelling oil prices. He noted that unexpected production disruptions in Kazakhstan and the recent Winter Storm Fern in the U.S. have also contributed to temporary price fluctuations.

The rising risk of military conflict involving the United States and Iran is expected to keep oil prices elevated amidst increasing geopolitical uncertainties, combined with ongoing restrictions on Russian oil imports and robust demand from China, notwithstanding initial predictions of a significant oversupply in the oil market this year.

In terms of implications for Nigeria, the Brent crude price hovering around $69 per barrel is advantageous, sitting above the federal budget target of $64.85 for 2026, which could enhance national fiscal revenues and boost foreign exchange reserves.

However, Nigeria's current oil output, which stands at approximately 1.5 to 1.6 million barrels per day, is still below its 2 million barrels per day capacity goal. This shortfall limits Nigeria's ability to fully capitalize on the global supply disruptions caused by the conflicts involving the U.S. and Iran.

Moreover, Nigeria's deregulated downstream oil sector translates international price hikes rapidly into higher domestic fuel costs. For instance, the Nigerian National Petroleum Company (NNPC) recently adjusted petrol prices at fuel stations across the country, just a day after Dangote Refinery raised its petrol price from N699 to N799 per litre.

While the increase in oil prices may positively impact government revenue, prevailing economic instability and rising import expenses, worsened by global logistical disruptions, pose risks for escalating inflation—projected to hit 37 percent in 2026—and potential depreciation pressures on Nigeria’s currency, the naira.

Analysts have cautioned that a large-scale confrontation affecting the Strait of Hormuz, which is critical for about 20 percent of the world’s oil transport, could drive Brent prices up significantly, potentially reaching anywhere between $91 to $150 per barrel.

Recently, U.S. President Donald Trump has escalated demands on Iran to discontinue its nuclear initiatives and has hinted at possible military strikes as a U.S. naval fleet approaches the region. While Nigeria leads oil production in Africa, Iran ranks as the fourth largest producer in the Organization of the Petroleum Exporting Countries (OPEC), generating roughly 3.2 million barrels daily.

Moreover, sources indicate that Mr. Trump is contemplating strategies to target Iranian security personnel and leaders to incite protests that could destabilize the current regime, as reported by Reuters.