Oil Prices Climb Above $105 as U.S.-Iran Tensions Threaten Global Supply

Global crude oil prices surged above $105 per barrel on Monday after renewed tensions between the United States and Iran heightened fears of prolonged supply disruptions across the Middle East.

Brent crude oil, against which Nigerian oil is priced, rose by more than 3.9 percent to $105.33 a barrel while U.S. West Texas Intermediate (WTI) crude gained 4.6 percent to trade near $100 per barrel after U.S. President Donald Trump rejected Iran’s latest response to a U.S.-backed peace proposal.

The latest development reversed earlier market optimism that diplomatic negotiations could ease tensions and reopen critical energy export routes in the Gulf region.

Analysts said the continued disruption around the Strait of Hormuz remains the major driver behind the rally in oil prices.

The strategic waterway handles nearly 20 percent of global oil shipments and remains under pressure amid ongoing geopolitical uncertainty.

Reuters reported that approximately one billion barrels of oil supply have been disrupted over the last two months due to the conflict and shipping restrictions in the region.

The renewed spike in crude prices comes after oil markets experienced sharp volatility last week. Brent crude had fallen below $100 per barrel earlier on hopes that Washington and Tehran were nearing a temporary peace agreement before negotiations deteriorated again.

Energy analysts warned that the oil market remains highly sensitive to headlines surrounding the U.S.-Iran situation, with further escalation capable of pushing prices significantly higher in the coming weeks.

Investment bank Citi said crude prices could continue to rise if negotiations between both countries remain difficult and supply disruptions persist across the Strait of Hormuz.

The current supply concerns have also affected Asian economies heavily dependent on Middle East crude imports. China’s oil imports reportedly declined to a four-year low in April due to tighter supply conditions and shipping constraints.

Despite rising prices, major global oil companies are maintaining spending discipline rather than aggressively increasing production.

Reuters reported that firms such as BP, Shell, Exxon Mobil and Chevron are prioritizing shareholder returns over expansion due to concerns about long-term market volatility.

The ongoing oil rally could have significant implications for inflation, transportation costs and energy-importing economies worldwide if prices remain elevated above the $100 threshold.

For Nigeria, sustained higher crude oil prices may improve government revenue and foreign exchange earnings in the short term.

However, analysts warn that persistent geopolitical instability could also increase global economic uncertainty and weaken long-term demand growth.

Traders are now closely watching diplomatic developments between Washington and Tehran as well as shipping activity around the Strait of Hormuz for further direction in the oil market.