The recent escalation of conflict between the United States and Iran, following reported US-Israeli airstrikes on Iranian nuclear facilities, is sending shockwaves through the global oil market. Energy analysts and petroleum marketers in Nigeria are now warning that this could drive petrol prices in the country as high as N1,000 per litre in the coming weeks, especially if Brent crude surpasses the $80 per barrel mark.
Global crude oil prices are already reacting sharply, with Brent crude trading higher. This surge is primarily attributed to “preemptive defensive strikes” by the United States on three major Iranian nuclear sites, announced by President Donald Trump. Iran, the third-largest crude producer in OPEC, has vowed retaliation, with reports indicating its parliament is moving to shut down the Strait of Hormuz. This strategic chokepoint handles nearly a fifth of the world’s oil supply, and its potential closure has immediately impacted global energy markets.
Nigerian petroleum marketers confirm that the volatility in global crude prices, coupled with the unstable foreign exchange market, is directly influencing domestic petrol costs.
“Private depots are likely to increase petrol price to N1,000 in the coming days with the current trend observed in the market,” stated Olatide Jeremiah, CEO of PetroleumPrice.ng. He noted that if crude prices hit or exceed $80 per barrel, Nigerians could see prices reach N1,000 at depots.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) also linked the recent price hikes to the Middle East crisis. Chinedu Ukadike, IPMAN’s National Publicity Secretary, explained that Brent crude has already risen from approximately $66 to around $77 per barrel since the conflict began on June 13.
“Once the exchange rate goes up, it will affect the price of petroleum products. Once crude oil is also going up, it will also affect it,” Ukadike clarified, explaining how both international crude prices and local foreign exchange rates jointly drive petrol costs.
Already, the impact is being felt at the pumps. On Friday, the Dangote Refinery, a major determinant of local petrol prices, increased its price from N825 to N880 per litre. In response, MRS Oil Nigeria and other stations distributing Dangote petrol raised their pump prices to an average of N955 in the South East and North West. By Sunday, other filling stations were selling petrol between N930 and N960, with Lagos maintaining the cheapest rate at N925 per litre.
Ukadike warned that the increased cost of lifting 50,000 litres of petrol is putting immense financial pressure on independent marketers, forcing them to adjust their pricing strategies. He projected that in some remote parts of the North, petrol could even reach N980, N990, or even N1,000 per litre due to additional transportation and logistics costs.
Even petrol refined locally by Dangote is experiencing price increases because the refinery sources crude at international market rates. This diminishes the expected price advantage over imported products, Ukadike added.
Nigeria’s major crude grades, Bonny Light, Brass River, and Qua Iboe, have already risen to around $79 per barrel, exceeding the Federal Government’s 2025 budget benchmark of $75 per barrel.9 While this offers potential short-term fiscal relief, it intensifies the pressure on domestic fuel prices.
Energy analysts, including Jorge Leon of Rystad and Ole Hvalbye of SEB, predict further increases in global oil benchmarks, with potential gains of $3 to $5 per barrel. However, Giovanni Staunovo of UBS noted that currently stable supply conditions and available spare production capacity among other OPEC members might limit exponential gains.
The future direction of oil prices remains uncertain, heavily dependent on whether the conflict leads to actual supply disruptions or if a de-escalation reduces the geopolitical risk premium.
Meanwhile, while Iran’s parliament has reportedly moved to close the Strait of Hormuz, a member of parliament’s national security commission clarified that the final decision rests with the Supreme National Security Council, indicating that such a move is not yet definitive. The Strait, a mere 21 miles wide at its narrowest point, is a crucial maritime artery through which approximately 20 per cent of the world’s oil, or 17 to 18 million barrels per day, passes.
