Brent crude hits $110 for the first time since May as Middle East tensions threaten global oil supplies, raising fresh concerns over petrol prices in Nigeria.
Brent crude oil touched $110 a barrel on Friday for the first time since May, as renewed tensions in the Middle East raised fears of further disruption to global oil supplies.
The international benchmark settled at $109.86 a barrel, up $3.94, or 3.7 percent, its highest close since May 19, according to Reuters. US West Texas Intermediate (WTI) crude gained 3.5 percent to settle at $101.41, its highest level since September 17. For the week, Brent rose 4.9 percent and WTI 10.4 percent.
What Drove the Rally
The increase followed reports of possible attacks on Saudi energy infrastructure and growing disruption to shipments through the Strait of Hormuz. Attacks around the strait had intensified over the past 10 days, with Iran saying it was stepping up strikes in response to the US blockade of its ports and tougher sanctions imposed last month. Analysts at Kpler said intensified Iranian attacks had driven Gulf crude flows sharply lower.
Energy Aspects, an energy consultancy, said oil prices rebounded after earlier losses as rumours of attacks on Saudi energy facilities circulated.
“Israeli reports suggest Iran may be preparing a pre-emptive strike following unusual military movements detected by Western intelligence. Although unverified, these developments reinforce our view that persistent escalation risks will keep flat prices supported,” Energy Aspects said.
Reuters also reported that a Saudi-led coalition said it had intercepted and destroyed a ballistic missile launched towards Yanbu, a Red Sea port that lets Saudi Arabia ship oil without passing through the Strait of Hormuz. Consultants Rapidan Energy Group said initial reports pointed to no damage to Yanbu’s infrastructure.
Russian Supply Worries
Investors were also assessing how much diesel Russia could supply to the world market. A drone attack forced the Ryazan refinery in Russia to suspend operations at a primary crude distillation unit, adding to concerns over supply.
To ease the market, the International Energy Agency agreed to release more than 20 million barrels of fuel, and the US Department of Energy offered an exchange of up to 17 million barrels from its Strategic Petroleum Reserve.
Since Friday
Prices stayed near the highs on Monday. Brent settled at $109.55, down 31 cents, after falling more than $3 earlier in the session as traders took profits. The Houthis claimed strikes on Saudi energy sites at Yanbu and Shaybah, and a tanker exploded after hitting a mine in the Strait of Hormuz. The Houthi claims were not independently verified in the reports reviewed.
What It Means for Nigeria
The rising oil prices have also pushed up petrol prices in Nigeria. On October 8, the federal government announced a 30-day petrol discount at NNPC filling stations, alongside plans to cap petrol landing costs at N1,350 per litre to help stabilise prices. Higher crude prices raise Nigeria’s export earnings, but also raise the import cost of refined products and, as a result, the pressure on pump prices.
