Oil prices gained $3 on Thursday as concerns mounted that a widening regional conflict in the Middle East could disrupt global crude flows with Israel reportedly planning to target Iran’s oil and gas infrastructure.
Brent crude oil, against which Nigerian oil is priced, inched higher by $3.72, or 5.03 percent to close at $77.62 a barrel while the US West Texas Intermediate (WTI) crude appreciated by $3.61, or 5.15 percent to $73.71.
Prices have continued to rise in the aftermath of Iran’s Tuesday attack on Israel, which involved around 200 missiles.
Following the missile barrage, Israel’s ground troops clashed with Hezbollah forces in southern Lebanon, with Israeli Prime Minister Benjamin Netanyahu vowing separate revenge on Iran.
The latest round of escalation was sparked by Israel’s sanctioned elimination of Hezbollah chief Hassan Nasrallah and Hamas political leader Ismail Haniyeh.
The tension was further sparked after US President Joe Biden indicated that there is a possibility of Israel striking Iran’s oil facilities.
This is after Israeli officials said on Wednesday that Israel could target Iran’s strategic energy infrastructure, including oil and gas rigs or nuclear installations, which would have the biggest economic impact, and send shockwaves through oil markets.
Iran is a member of the Organisation of the Petroleum Exporting Countries (OPEC) with production of around 3.2 million barrels per day or 3 percent of global output.
Market analysts also raised concerns that such escalation could prompt Iran to block the Strait of Hormuz or attack Saudi infrastructure as it did in 2019. The strait is a key logistical chokepoint through which 20 percent of daily oil supply passes.
The market will also weigh development coming from Libya as oil production resumed after more than a month of suspended output due to a political standoff between the eastern and western administrations in the North African OPEC producer.
The end of this Libyan crisis will lead to the return of a few hundred thousand barrels of crude per day to the market.
Also, US crude inventories rose by 3.9 million barrels to 417 million barrels in the week ended September 27, the US Energy Information Administration (EIA) said on Wednesday.
A rise in inventories shows that the US market is well-supplied and can withstand any disruptions.
