Global oil prices surged dramatically on Friday, marking the fastest single-day increase in three years, as geopolitical tensions flared in the Middle East. Brent Crude, Nigeria’s benchmark, spiked by nearly 14 percent during intra-day trading to almost $78.50 per barrel before settling at $74.68. Similarly, West Texas Intermediate (WTI), the U.S. benchmark, rose to around $77 per barrel.
While the spike offers Nigeria temporary relief by pushing prices above the government’s 2025 budget benchmark of $75 per barrel, it also presents significant challenges. Higher global crude prices could translate into increased fuel costs at the pump domestically, and the volatility may exacerbate foreign exchange instability if Nigeria’s FX management remains weak. A short-term boost in oil revenue may improve dollar inflows, but sustained volatility poses a risk to naira stability.
The price surge followed Israeli airstrikes on Iranian territory, reportedly targeting nuclear facilities, missile factories, and key military figures. Iran responded with drone and missile attacks, intensifying fears of a broader regional conflict that could threaten global oil supply routes—particularly through the Strait of Hormuz, a chokepoint for nearly 20 million barrels of oil per day.
The conflict, which has been simmering for nearly two years, has now escalated significantly, raising alarm across global markets. Though there has been no reported major disruption to oil output yet, analysts warn that an extended clash could reroute global crude flows and limit Iranian exports.
Israel’s military campaign has reportedly killed senior Iranian commanders, including Islamic Revolutionary Guard Corps head Hossein Salami. Despite the strikes, Iran’s National Oil Refining and Distribution Company reported no damage to refining or storage infrastructure, and operations are said to be ongoing.
The International Atomic Energy Agency (IAEA) has also formally accused Iran of breaching its nuclear non-proliferation obligations—a move that could fuel further international pressure on Tehran.
Meanwhile, shipping costs have surged, with forward freight rates for July crude shipments from the Middle East to Asia climbing 15 percent to $12.83 per metric ton, according to Marex Group data.
Despite the turmoil, JPMorgan is maintaining its base-case forecast for Brent crude in 2025 in the low-to-mid $60s range, assuming that diplomatic efforts will eventually prevent full-scale war. However, in a worst-case scenario involving a military conflict and closure of the Strait of Hormuz, the bank warns oil could soar to between $120 and $130 per barrel.
For now, Nigeria stands at a precarious crossroad—facing potential windfalls from elevated oil prices, yet vulnerable to the economic shocks that such volatility could unleash if tensions in the Middle East continue to escalate.
Nzubechukwu Eze
