Business
Oil price reverses gains, falls 0.8% despite escalating US-Iran hostilities
By Obas Esiedesa, Abuja
Global oil prices eased by 0.82 per cent to $84.24 per barrel on Wednesday as investors took profits after the previous day’s sharp rally, although renewed military confrontation and escalating rhetoric between the United States and Iran continued to underpin fears of disruptions to global crude supplies.
Brent crude, the international benchmark, fell to $84.24 per barrel from Tuesday’s $84.94, but remained significantly above Sunday’s $76.01 as geopolitical tensions in the Middle East kept a sizable risk premium in the market.
The latest price movement came as Iran threatened to widen disruptions to regional energy exports following a fresh wave of US military strikes on Iranian targets.
Iran’s Revolutionary Guards said the Strait of Hormuz would remain shut until the United States ended what it described as its “acts of aggression”, warning that Tehran could also block other regional oil and gas export routes.
The warning followed coordinated drone, air and naval strikes carried out by the US military’s Central Command (CENTCOM) on Wednesday morning, after another seven-hour military operation overnight.
Earlier, Trump had threatened to impose restrictions on Iranian ports while allowing vessels from other countries to continue operations subject to the proposed cargo charge, a move that heightened concerns over global oil trade and supply chains.
Despite Wednesday’s pullback, oil prices remain well above the levels seen only a week ago. Brent crude had weakened to around $72 per barrel amid easing geopolitical tensions, increased production by OPEC+ members and concerns over slowing global demand before rebounding to $76 on Sunday and surging to nearly $85 on Tuesday.
Market analyst Olufemi Idowu, Partner at Kreston Pedabo, said the renewed conflict has restored a significant geopolitical risk premium to crude prices, with investors closely monitoring developments around the Strait of Hormuz and the potential impact of further sanctions and military action on global energy markets.
“I do not expect any major upward review in the local pump price of petrol because oil price is still significantly lower than the level we had during the war,” he said.
For Nigeria, the elevated crude prices come as the country records its strongest oil production performance in more than six years, raising expectations of higher export earnings, stronger foreign exchange inflows and improved government revenues if current price levels are sustained.
Data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that Nigeria’s average daily crude oil and condensate production rose by 2.3 per cent to 1.74 million barrels per day (mbpd) in June from 1.70mbpd in May.
