Crude oil prices recovered towards $100 per barrel on Friday as renewed attacks on oil tankers in the Middle East raised concerns over supply disruptions, although the market remained on course for substantial weekly losses.
Brent crude oil, the international benchmark, rose 1.31% to $99.58 per barrel during early trading after briefly exceeding $100, while US West Texas Intermediate (WTI) gained 0.95% to $91.38 per barrel.
Despite the recovery, Brent was heading for a weekly decline of approximately 12%, with WTI also on track to lose 12.1%, reflecting a sharp reversal in oil market sentiment.
The recovery followed Thursday’s gains, when Brent settled 3.88% higher at $98.29 per barrel after fresh security incidents involving oil tankers renewed concerns about the movement of crude through the Persian Gulf.
Earlier in the week, prices had fallen sharply as investors assessed the possibility of a diplomatic resolution to the US-Israeli conflict with Iran following the American midterm elections.
Brent and WTI both declined more than 8% on Wednesday, reaching their lowest settlement levels in over two months.
The market reaction reflected expectations that changes in the political balance in Washington could increase pressure for negotiations and reduce the risk of prolonged disruptions to Middle Eastern oil exports.
However, continued attacks on commercial vessels have complicated expectations of a rapid return to normal shipping operations.
Iran reported three additional tanker attacks in the Strait of Hormuz on Thursday, while maritime security reports indicated that incidents involving oil-carrying vessels remained elevated.
The Strait of Hormuz is a critical transportation route for crude oil and petroleum products exported from the Middle East, making disruptions particularly significant for global energy markets.
Rising Supply Adds Pressure to Oil Prices
Beyond the geopolitical uncertainty, growing evidence of excess global oil supply is weighing on the market.
JPMorgan estimated that the global oil market recorded a surplus of approximately 1.4 million barrels per day in October as high prices weakened demand and supply conditions improved.
The emerging imbalance suggests that crude prices could face further downward pressure if Middle Eastern exports recover and consumption remains subdued.
However, continued security threats to shipping could prevent prices from falling as quickly as supply and demand fundamentals might otherwise suggest.
Implications for Nigeria
For Nigeria, the sharp weekly decline in crude prices could affect petroleum export earnings and government revenue if sustained.
The country depends on oil exports for a substantial portion of its foreign exchange inflows, making fluctuations in international crude prices important for fiscal planning and exchange-rate stability.
Lower oil prices could also affect the revenue outlook for upstream petroleum producers, although the impact would depend on production volumes, operating costs and individual sales arrangements.
Conversely, reduced international crude prices could ease pressure on domestic petroleum-product costs, subject to exchange-rate movements and refining and distribution expenses.
For investors, the immediate focus will be on developments in US-Iran diplomacy, security conditions in the Strait of Hormuz and signs of weakening global oil demand.
The contrasting signals from improving supply conditions and continuing geopolitical risks suggest that crude prices could remain volatile in the coming trading sessions.
