Global oil prices went up sharply on Friday after Israel confirmed it had carried out a military strike on Iran.
This has increased fears that the tension between the two countries could affect oil supplies from the Middle East.
Shortly after the news broke, both Brent crude and Nymex light sweet crude rose by over 10%, reaching their highest levels since January. Later, the prices dropped slightly but still remained about 7.5% higher. As of midday trading in Asia, Brent crude was selling for $74.50 per barrel, while Nymex crude stood at $73.20.
This sudden rise in oil prices is worrying many countries, including Nigeria, because it can lead to higher fuel costs, food prices, and transport expenses for regular citizens.
The Middle East is a key supplier of oil to the world. Any trouble in the region, especially between Iran and Israel, could cause serious problems for oil shipments. The Strait of Hormuz, a narrow waterway bordered by Iran, Oman, and the UAE, is one of the world’s most important routes for oil transport. Almost one-fifth of the world’s oil passes through it.
Energy experts say if Iran targets the strait or nearby oil infrastructure, millions of barrels of oil could be delayed or blocked each day.
“What we see now is a very early reaction to the risk,” said Saul Kavonic, Head of Energy Research at MST Financial. “But over the next day or two, the market will need to watch closely to see how bad this could get.”
As investors worried about the situation, some began moving their money into what are called “safe haven” assets like gold and the Swiss franc. These are seen as safer investments during times of war or unrest.
Later in the day, the Israel Defense Forces said Iran had responded by launching around 100 drones toward Israel.
Energy expert Vandana Hari from Vanda Insights told the BBC: “It’s an explosive situation, albeit one that could be defused quickly as we saw in April and October last year, when Israel and Iran struck each other directly.”
She added, “It could also spiral out into a bigger war that disrupts Mideast oil supply.”
Nigeria, like many other oil-importing countries, may soon feel the effect of rising oil prices. Fuel imports could become more expensive, leading to a possible increase in pump prices and higher costs for goods and services.
