Oil prices rose sharply on Thursday as renewed uncertainty over the US-Iran conflict and fresh concerns over the safety of vessels passing through the Strait of Hormuz pushed supply risks back to the forefront of the market.
As at the time of writing 08:20 pm (WAT), Brent crude was up 2.05% at $89.64 per barrel, while US (WTI) West Texas Intermediate gained 1.70% to $83.63. The gains came after oil had declined earlier in the week on hopes that diplomatic efforts could ease restrictions on shipping through the strategic waterway.
The latest rally was reinforced by a maritime incident in which a tanker was struck by an unknown projectile while transiting the Strait of Hormuz. The United Kingdom Maritime Trade Operations said the incident, which occurred off the Omani coast on August 25, caused a fire on the vessel, although the blaze was later extinguished.
The incident has heightened concerns over the security of commercial shipping through Hormuz, a critical route for global energy supplies. Earlier this month, another vessel was struck by an unknown projectile while transiting the waterway, damaging its engine room and leaving one crew member injured.
Oil markets were also supported by weakening expectations of an immediate diplomatic breakthrough between Washington and Tehran. Reuters reported that US President Donald Trump had rejected a return to the terms of a June ceasefire agreement, reducing hopes that negotiations could quickly restore normal oil flows from the region.
The uncertainty is particularly significant because shipping through the Strait of Hormuz remains below normal levels. While vessel movements have shown some improvement, the waterway continues to face security restrictions, leaving traders concerned that any further escalation could disrupt crude supplies and increase the premium attached to Middle Eastern oil.
For Nigeria, the rise in Brent is important because the benchmark directly influences the value of the country's crude exports and government oil earnings. However, the benefit to Nigeria will depend on how long prices remain elevated, as well as domestic crude production and export volumes.
The immediate focus for the market remains the security of the Strait of Hormuz and the direction of US-Iran diplomacy, with any further attack on commercial shipping capable of adding fresh upward pressure to crude prices.