Escalating tensions in the Middle East have reignited fears of a global oil shock after an Iranian military official warned that crude prices could surge to $200 per barrel as the U.S. continues its military action in the region.
A spokesperson for Iran’s Khatam al-Anbiya Central Headquarters said Tehran may abandon its strategy of retaliatory strikes in favor of sustained attacks on adversaries, including actions that could target oil shipments.
“We won’t allow even one liter of oil to reach the U.S., Zionists (Israel) and their partners. Any vessel or tanker bound to them will be a legitimate target,” said Ebrahim Zolfaqari.
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The warning comes as Nigeria insists it will maintain market-based fuel pricing even if global oil markets become more volatile.
Zolfaqari warned that any escalation threatening regional stability would have immediate consequences for energy markets.
“Get ready for the oil barrel to be at $200 because the oil price depends on the regional security which you have destabilized,” he said.
Global energy supply was caught in the crossfire following the involvement of the Strait of Hormuz, a narrow shipping corridor through which roughly a fifth of global seaborne oil passes. The disruption to tanker traffic through the waterway triggered a supply shock that has sent energy prices sharply higher.
Energy markets have historically reacted swiftly to instability in the Persian Gulf. Analysts say even the perception of risk to the shipping route tends to push up crude prices as traders price in potential shortages and higher shipping insurance costs.
A surge in oil prices sends ripples across the global economy by raising transportation costs, fueling inflation, and tightening financial conditions.
Nigeria Sticks With Market Pricing
Other nations have been taking measures to curtail the impact of the rising energy costs, as they pose risks of inflation and broader economic downturn. Despite the risks, Nigeria’s government said it would not reintroduce fuel price controls or subsidies.
Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the administration of President Bola Tinubu remains committed to allowing market forces to determine petrol prices.
“Rather than now reverting back and taking a backward step, we will look at every other measure that can help the cost of living of Nigerians without resorting to non-market pricing,” Edun said during an interview on Politics Today aired on Channels Television.
The government removed Nigeria’s long-standing petrol subsidy in 2023, arguing that the policy had drained public finances and distorted the energy market.
“It is the market price. That is what has been instilled by Mr. President that was missing for so long, market pricing of petroleum products,” Edun added.
Officials say one of Nigeria’s main buffers against global shocks is the country’s expanding domestic refining capacity.
Edun said the government has moved to increase crude supply to the Dangote Refinery, the 650,000 BPD privately owned refinery built by billionaire industrialist Aliko Dangote. Authorities believe the refinery’s operations could help stabilize fuel availability in Nigeria by reducing dependence on imported refined products.
“At this time, the resilience that the Nigerian economy has is coming largely from the fact that we do have that investment in refining,” Edun said.
He added that the expansion of local refining capacity has improved Nigeria’s ability to withstand external shocks that have forced some countries to ration fuel supplies during energy crises.
Nigeria historically exported crude oil while importing most of its refined fuel due to inadequate domestic refining capacity, a structural weakness that often amplified the impact of global price swings.
However, energy analysts say local refining capacity may not fully insulate Nigeria from the effects of a major global oil shock.
Even if fuel is refined domestically, the cost of crude oil—the key input—still tracks global market prices. If crude prices surge, the cost of producing petrol locally will also rise, meaning consumers could still face sharply higher pump prices.
The impact could be particularly severe in Nigeria, where unreliable electricity supply forces households and businesses to depend heavily on petrol and diesel generators.
In cities and rural communities alike, millions of Nigerians rely on generators to power homes, shops, and small businesses amid chronic outages from the national grid. If crude prices were to approach $200 per barrel, analysts warn that fuel costs could rise to levels many households and businesses would struggle to afford.
In such a scenario, the economic consequences could extend beyond transport costs, potentially affecting food prices, manufacturing output, and the survival of small enterprises that depend on generator power to operate.
For Nigeria’s government, the situation presents a difficult balancing act: maintaining economic reforms designed to strengthen public finances while cushioning households from the potential fallout of global energy turmoil.
But Edun said direct intervention in fuel pricing would only be considered under extreme circumstances.
“Normally, given the policies and philosophy of this government, it would always have to be a last resort,” he said.