Global oil prices climbed on Tuesday, with Brent crude rising above $91 per barrel as fading prospects of a deal to end the Middle East conflict heightened concerns over disruptions to global energy supplies.
Brent crude gained about 1 per cent to $91.76 a barrel, while US West Texas Intermediate (WTI) also rose 1 per cent to $85.24 per barrel.
The latest increase came as tensions surrounding the conflict involving Iran, Israel and the United States intensified, with markets increasingly concerned that disruptions to crude shipments through the strategic Strait of Hormuz could persist.
Iran said it would adopt a more offensive stance, while the United States ruled out extending a ceasefire arrangement, further weakening expectations of an immediate diplomatic breakthrough.
The waterway is critical to global energy markets, with a significant proportion of the world’s seaborne oil supplies passing through it.
The latest concerns were reinforced on Tuesday after a projectile struck a vessel transiting out of the Strait of Hormuz, adding to a series of incidents that have disrupted shipping through the strategic waterway.
Tracking data indicated that vessel crossings remained in the single digits despite a modest increase from levels recorded over the weekend.
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Iran has meanwhile been negotiating with Oman over an arrangement to manage shipping through the Strait of Hormuz, with Tehran saying the two countries were close to reaching an agreement.
However, the diplomatic efforts have been overshadowed by escalating rhetoric, further complicating efforts to restore normal commercial traffic through the waterway.
Analysts said the uncertainty surrounding Hormuz has introduced a significant geopolitical risk premium into oil prices, as traders weigh the possibility of prolonged supply disruptions.
A sustained reduction in tanker traffic could tighten global crude supplies and push prices higher, particularly if major producers are unable to compensate for disrupted shipments.
For Nigeria, higher international crude prices could provide some relief to government finances if the increase is sustained and accompanied by stronger domestic production.
The country remains heavily dependent on crude oil exports for foreign exchange earnings and government revenue,
According to the Organisation of the Petroleum Exporting Countries (OPEC), Nigeria’s average daily crude oil production increased to 1.505 million barrels per day in July.
Analysts said the combination of higher crude prices and rising output could improve Nigeria’s export earnings, strengthen foreign exchange inflows and support government revenue.
However, they cautioned that the gains could be limited if higher global oil prices are accompanied by increased domestic fuel costs, elevated import bills or renewed pressure on inflation.
They also noted that the benefits would depend on Nigeria’s ability to sustain production growth, reduce crude theft and pipeline losses, attract investment into the upstream sector and maintain stability in oil-producing communities.
With geopolitical tensions still elevated and traffic through the Strait of Hormuz yet to return to normal, oil markets are expected to remain highly sensitive to developments in the conflict and the prospects for a durable ceasefire.