Nigeria remains on course for crude oil bonanza as global prices surge to $112 per barrel

NIGERIA could be on course for another petroleum bonanza as the price of crude oil surged to $112 a barrel as growing tensions in the Middle East and the closure of the Straits of Hormuz in particular have made the markets jittery.

Crude oil exports account for about 90% of Nigerian government revenue and whenever there is a surge in global prices, the country enjoys a windfall. With the US/Israeli war with Iran enters its 22nd day today, fears about global scarcity as a result of supply disruptions has led to prices.

Although President Donald Trump has hinted at winding down US military actions in the Middle East, there is no sign of a political solution being reached. Yesterday for instance, Iran fired missiles at the Chagos Islands, a remote British overseas territory located more than 2,000 miles from Tehran and the UK prime minister Keir Starmer, gave the US approval to use its bases for strikes against Iran.

It is not all good news for Nigerians though as the crisis has led to a rise in the price of petrol, with the Dangote Refinery increasing prices for the fourth time this month to $1,245 per litre. This in turn has led to some petroleum marketers and filling stations in Abuja to hike their petrol pump price to between N1,331 and N1,430 per litre.

Most of the uncertainty in the market comes from Iran's closing of the Straits of Hormuz to shipping as the narrow passage is the conduit through which 20% of the world's crude oil is shipped. Countries including Saudi Arabia, Kuwait, United Arab Emirates, Iraq, Oman, Qatar and Bahrain all ship their oil through this shipping lane.

President Trump has given Iran 48 hours ultimatum to reopen the straits to shipping or face the destruction of its energy infrastructure. This warning came as Iran launched its most destructive attack yet on Israel, targeting central and southern Israel, sending millions repeatedly running for shelters.

Writing on his Truth Social online platform, President Trump stated that the US would hit and obliterate Iranian power plants, starting with the biggest one first, if Tehran did not fully reopen the strait within 48 hours, or 23:44 GMT on Monday. This ultimatum came as more US Marines headed out to the Middle East.

Iran’s foreign minister Abbas Araghchi, said Tehran had only imposed restrictions on vessels from countries involved in attacks against Iran and would assist others that stayed out of the conflict. In response to President Trump’s threat, Iran’s army said it will target energy and other infrastructure belonging to the US and the regime in the region.