Oil Price Ease Despite Rising US-Iran Tensions

Global oil prices slipped by 0.82 per cent on Wednesday, with Brent crude falling to $84.24 per barrel from $84.94 the previous day. Despite the decline, the oil price remained well above the $76.01 recorded on Sunday as growing tensions between the United States and Iran continued to fuel concerns over global crude supply.

The slight pullback followed profit-taking by investors after Tuesday’s sharp rally. However, fears of supply disruptions remained strong after Iran warned it could expand action against regional energy export routes. The Islamic Revolutionary Guard Corps (IRGC) said the Strait of Hormuz would remain closed until the United States stopped what it described as its “acts of aggression,” while also threatening other oil and gas export routes.

The warning came after the US Central Command (CENTCOM) carried out fresh drone, air and naval strikes on Iranian military targets. Earlier, President Donald Trump also threatened restrictions on Iranian ports, adding to market concerns about the stability of global energy supplies.

Although the oil price eased on Wednesday, Brent crude remains significantly higher than levels seen a week ago, when prices dropped to around $72 per barrel due to easing geopolitical tensions, increased OPEC+ production and concerns over slowing global demand.

Market analyst Olufemi Idowu, Partner at Kreston Pedabo, said the renewed conflict has added a substantial geopolitical risk premium to crude prices. He noted that investors are closely watching developments around the Strait of Hormuz and the possibility of further sanctions or military action.

“I do not expect any major upward review in the local pump price of petrol because oil price is still significantly lower than the level we had during the war,” he said.

For Nigeria, the higher oil price comes as crude production continues to improve. According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), average daily crude oil and condensate output increased by 2.3 per cent to 1.74 million barrels per day in June, raising hopes for stronger export earnings, increased foreign exchange inflows and higher government revenue.

How do you think rising global oil prices could affect Nigeria’s economy in the coming months?