Nigeria could face another increase in petrol prices as international crude oil prices climbed to $107 per barrel on Thursday from around $100 the previous day, creating fresh pressure on the cost of refined petroleum products.
The latest surge comes after domestic petrol prices had already risen significantly, moving from about N830 per litre before the Middle East crisis to N1,310 or more in some parts of the country.
Before the crisis began on February 28, international crude oil prices were trading below $69 per barrel. However, disruptions to global oil supplies have pushed prices sharply higher, forcing the Dangote Petroleum Refinery and fuel importers to review their pricing.
Brent crude moved above $107 per barrel on Thursday, while US West Texas Intermediate also traded above $100 as the conflict between the United States and Iran disrupted tanker movements through the strategically important Strait of Hormuz.
Oilprice.com reported that Brent gained more than five per cent during early trading on Thursday, after crossing the $100 mark earlier in the week as concerns about global supply shortages intensified.
The volume of crude moving through the Strait of Hormuz has also dropped significantly. The waterway previously carried between six million and nine million barrels of crude daily, but recent estimates indicate that the flow has fallen below two million barrels per day.
Shipping trackers have also indicated that no very large crude carriers had exited the strait since early September, while attacks on tankers and other commercial vessels in the Persian Gulf have increased uncertainty surrounding global oil supplies.
Iran has claimed responsibility for attacks on several vessels, while the United States has confirmed the destruction of some Iranian oil tankers.
With no immediate ceasefire appearing likely and the confrontation potentially continuing for weeks or longer, oil traders have been forced to reassess the risks facing global crude supplies.
Physical crude benchmarks have now moved above $100 per barrel, while futures prices have also risen amid tightening inventories and increasing security risks affecting alternative supply routes.
For several months, the recovery in tanker traffic had helped to ease upward pressure on crude prices. However, the latest disruption has altered the outlook, with prolonged restrictions around the Strait of Hormuz threatening to keep international oil prices elevated.
For Nigeria, a prolonged period of high crude prices could place additional pressure on petrol prices as domestic refiners and importers respond to increased global crude costs and disruptions to supply.
Source: Oilprice.com
