Global oil prices have climbed above $100 per barrel for the first time since May as escalating tensions in the Middle East fuel concerns over disruptions to global energy supplies, with the surge expected to put fresh pressure on inflation and fuel costs worldwide.
Brent crude, the international benchmark for oil prices, jumped more than 6 per cent on Thursday, extending gains recorded over recent days after the United States intensified military strikes against Iran.
The latest spike followed attacks by Yemen’s Houthi militia on oil tankers in the Red Sea, threatening a critical shipping route used by Saudi Arabia to transport crude while bypassing the strategically important Strait of Hormuz.
Natural gas prices have also risen sharply. The UK benchmark gas price is now around 150 pence per therm, up from approximately 98 pence at the end of June.
Oil prices had previously eased following a temporary ceasefire between the US and Iran, falling to levels seen before military operations by the US and Israel against Iran began on February 28. However, hopes for lasting peace have faded after the ceasefire collapsed.
US Secretary of State Marco Rubio said this week that Iran’s leadership was “not ready to make a deal,” reinforcing fears that the conflict could continue to threaten global energy markets.
Inflation concerns return
The rise in oil prices is expected to increase the cost of petrol, diesel and transportation, potentially driving up prices of food and other consumer goods as businesses pass higher operating costs on to customers.
Although inflation has moderated in recent months—falling to 2.6% in the UK in June and 3.5% in the United States—economists warn that sustained increases in energy prices could reverse that progress.
In the UK, petrol prices have risen by about 5 pence per litre since the beginning of July, reaching nearly £1.56 per litre, while diesel now averages £1.72 per litre, according to the RAC.
In the United States, average gasoline prices have climbed back above $4 per gallon, according to the American Automobile Association (AAA).
Jonathan Raymond, investment manager at Quilter Cheviot, said persistently higher energy prices could create fresh challenges for central banks battling inflation.
He warned that rising fuel costs could ripple through the broader economy, increasing business expenses and ultimately pushing up the prices of food and other goods. If energy prices remain elevated, central banks may be forced to keep interest rates higher for longer or even raise them further.
The Bank of England has kept its benchmark interest rate at 3.75 per cent over its last four meetings, and economists expect policymakers to maintain that stance while monitoring inflationary pressures.
In the United States, Federal Reserve Chair Kevin Warsh recently told lawmakers that the central bank has “no tolerance to persistently elevated inflation” and remains committed to restoring price stability despite political pressure from President Donald Trump to lower borrowing costs.
For Nigeria, higher crude oil prices could boost government revenue and foreign exchange earnings if production levels remain stable. However, consumers may also face higher petrol and transportation costs, especially if global fuel prices continue to rise. Increased energy costs could also place additional pressure on inflation, affecting food prices, manufacturing and household spending.
The latest developments highlight how geopolitical tensions in the Middle East continue to shape global energy markets, with consequences likely to be felt by businesses, governments and consumers across the world, including Nigeria.
