Crude oil prices climbed more than $1 per barrel on Monday, pushing Brent above $97 as escalating attacks on oil tankers by the United States and Iran intensified concerns that Middle East supply disruptions could deepen.
Brent crude oil, against which Nigerian crude oil is priced, gained $1.20, or 1.25 percent to $97.48 per barrel by 08:27 a.m, while US West Texas Intermediate crude rose $1.14, or 1.25 percent to $92.62 per barrel.
The advance extended a sharp rally from last week, when Brent gained 7.8 percent and WTI climbed nearly 10 percent as renewed hostilities between Washington and Tehran disrupted shipping through the Strait of Hormuz.
The latest escalation has shifted market attention increasingly towards the physical availability of crude rather than simply the geopolitical risk premium traditionally associated with conflict in the Middle East.
US forces struck three Iranian oil tankers on Saturday, including a vessel near Kharg Island, Iran’s principal crude export hub, according to the US Central Command.
Iran’s Islamic Revolutionary Guard Corps Navy said it also targeted three oil tankers travelling through what it described as unauthorised routes in the Strait of Hormuz, as well as three US vessels operating elsewhere.
The attacks have heightened concerns that commercial energy vessels are becoming increasingly exposed as the conflict expands into critical maritime routes.
That risk is already being reflected in shipping activity.
An average of just 10 commodity vessels per day crossed the Strait of Hormuz over the past 10 days, according to data from Kpler, marking the lowest level since May.
Traffic deteriorated particularly sharply over the weekend.
Only two vessels passed through the strait on Saturday, while six transited on Sunday, with most using the Iranian route.
The reduction is significant because the Strait of Hormuz was one of the world’s most important energy corridors before the conflict, handling roughly one-fifth of global oil supplies.
Any sustained decline in tanker movements therefore has the potential to remove substantial volumes of crude from the international market even if producing countries maintain output at their fields.
The risk could increase further after Iran said it plans to establish a new restricted zone in the Gulf and introduce new shipping routes through the Strait of Hormuz.
Iranian officials said vessels entering the proposed restricted area could face sanctions, adding another layer of uncertainty for shipowners, commodity traders and insurers operating in the region.
Shipping conditions were already deteriorating before the latest announcement.
No very large crude carrier had exited the Strait of Hormuz since Wednesday, according to Kpler data cited by Reuters, while a tanker carrying refined petroleum products from a Saudi port attempted to leave the waterway on Sunday but was turned back.
The disruption is increasing concern that the market could face a more prolonged shortage of Middle Eastern barrels.
Analysts at ANZ said a prolonged confrontation characterised by intermittent military action between the United States and Iran appears increasingly likely, potentially delaying a full recovery in regional oil supplies.
The market is also receiving little immediate additional supply relief from OPEC+.
The producer alliance agreed on Sunday to leave its oil production policy unchanged for October as members turn their attention towards negotiations over future production quotas.
The decision means the group will not introduce another scheduled production increase next month at a time when geopolitical disruptions are already limiting the amount of Middle Eastern crude reaching international buyers.
Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman were among the core OPEC+ producers participating in the meeting.
The Iran conflict has increasingly weakened the group’s ability to influence global supply through production decisions alone because the availability of crude is now being constrained partly by whether tankers can safely transport barrels from the Gulf.
The combination of unchanged OPEC+ supply policy and deteriorating Hormuz traffic is providing additional support for crude prices.
Brent’s move above $97 also brings the psychologically important $100-per-barrel level back into focus after the international benchmark recorded its strongest weekly advance in several weeks.
The consequences of a sustained rally would extend beyond crude producers.
Higher oil prices are already feeding into the cost of diesel and other refined petroleum products, increasing transportation and manufacturing expenses and potentially complicating efforts by central banks to contain inflation.
For oil-exporting countries such as Nigeria, elevated crude prices could strengthen export earnings, government revenue and foreign-exchange inflows if production volumes remain stable.
Nigeria could also benefit from buyers seeking alternative crude supplies as Middle Eastern exports face continued disruption.
However, the broader economic benefits could be partially offset by higher international prices for refined products, shipping and other energy-related imports.
Attention in the oil market will now remain firmly on tanker movements through the Strait of Hormuz.
A sustained recovery in shipping could ease concerns about physical supply and remove some of the geopolitical premium embedded in crude prices.
But further attacks on commercial vessels or tighter restrictions on Hormuz traffic could push the market towards a substantially larger supply disruption and intensify pressure on oil prices.
