The global oil market is approaching a critical tipping point, with Nigeria’s flagship crude grade projected to move toward $100 per barrel as geopolitical tensions disrupt supply routes and jolt energy markets.
Nigeria’s Bonny Light crude oil recently traded above $90 per barrel, rising roughly one-third within the week. The surge mirrors gains in Brent crude, which climbed past $92 per barrel on Friday after posting weekly gains of more than 27%.
Energy traders say the rally reflects mounting fears that disruptions in the Strait of Hormuz could trigger a major supply shock. The narrow shipping corridor — linking the Persian Gulf to global markets — carries about 20% of the world’s oil supply.
With tanker traffic slowing dramatically amid the escalating confrontation involving Iran and Israel, analysts believe that crude prices could reach $100 per barrel within days if the disruption persists.
Revenue boost for Nigeria, economic trouble for consumers
For Nigeria, the oil rally could significantly improve government finances. The country’s 2026 federal budget is benchmarked at $64.85 per barrel, meaning prices around $90 — and potentially higher — would generate far greater oil revenue than originally projected.
Higher crude prices typically strengthen foreign exchange inflows and improve fiscal balances for Nigeria, where oil exports remain the dominant source of dollar earnings. The development could help ease pressure on government finances and provide additional funding space for public spending.
However, economists note that the benefits are likely to be partially offset by rising domestic fuel costs.
Despite being one of Africa’s largest oil producers, Nigeria continues to rely heavily on imported refined petroleum products. As global crude prices climb, domestic fuel prices are already surging across the country.
Petrol is now selling above N1,000 per liter in many parts of the country, due to rising depot prices and higher supply costs. Africa’s largest refinery, Dangote Petroleum Refinery, has increased petrol prices twice within a week amid the volatility in global oil markets.
The refinery’s gantry price recently rose to about N995 per liter after cumulative increases of roughly N221 within days. These increases have rippled through the distribution chain, pushing retail prices even higher at filling stations nationwide.
Against this backdrop, fuel marketers have appealed to the federal government to intervene. The National President of the Independent Marketers Association of Nigeria (IPMAN), Abubakar Garima, said rising international oil prices linked to the Middle East crisis are contributing to the spike in pump prices.
“You know what is happening globally is one of the causes,” Garima said in an interview with NairaMetrics.
“We contacted Dangote Refinery, and up till now I think they find it very difficult to get crude oil at a lower rate because of this crisis.”
Garima noted that marketers are also sourcing fuel from other depots, but those suppliers are selling at similarly elevated prices.
“Yes, we buy from other depots; it’s the same thing. Other depots are selling at a higher rate as well. If Dangote sells at a lower rate, it may not be like that; they will bring it down,” he said.
According to him, depot prices are already around N1,000 to N1,010 per liter before transportation and logistics costs are added.
By the time marketers transport fuel to retail outlets, the pump price increases further.
“In the North, they may end up selling it at N1,100 or N1,070, and in the South-West, where they have a lot of depots, they may sell it at N1,050 or N1,030,” Garima said.
“We too are not happy with the development.”
Garima said marketers are urging the federal government to intervene to prevent further increases in fuel prices.
He suggested that authorities consider providing relief to the Dangote refinery by offering crude oil at a lower domestic price rather than tying it strictly to international benchmarks.
“So our advice is that the government can do something to support Dangote in terms of crude oil since he can refine a higher capacity of crude oil in the country,” he said.
“They can give him a price that he is supposed to sell to the marketers so that the masses will not suffer a lot.”
Garima argued that providing such relief could enable the refinery to lower the price at which it sells fuel to marketers, helping reduce pump prices nationwide.
“Our advice is that maybe they should reduce the cost of crude oil to him. They should not base it on the prevailing price in the world,” he said. “I think a relief is necessary because of the situation.”
Global supply disruptions deepen
The surge in oil prices is being driven primarily by the disruption of shipping routes in the Strait of Hormuz.
Iran has threatened vessels attempting to cross the route, warning that ships could be attacked if the conflict escalates further. As a result, tanker traffic has slowed sharply, and several oil supertankers are waiting outside the Gulf rather than entering the high-risk zone. Some oil-producing countries have already begun cutting production as storage facilities fill up with crude that cannot be exported.
Refined fuel markets are also showing signs of strain, with diesel and jet fuel prices climbing as refineries in parts of Asia and the Middle East reduce output.
Investment banks, including JPMorgan Chase and Goldman Sachs, have warned that if the Strait of Hormuz remains blocked for weeks, oil prices could climb above $100 and potentially reach $150 later in the year.
The administration of Donald Trump has attempted to calm markets by announcing naval escorts and insurance guarantees for tankers traveling through the strait. Still, traders say the outlook for oil prices will largely depend on how the conflict evolves.
If tensions ease and shipping resumes, prices could fall quickly. But if the standoff continues, the global oil market — and fuel consumers in countries like Nigeria — could face sustained price pressure in the months ahead.
