Brent Crude Crosses $100 per Barrel As Iran, US Trade Words
- Brent crude crossed $100 per barrel for the first time since July 23 after the US struck three Iranian oil tankers over the weekend
- US Central Command said its naval blockade of Iran has redirected 92 commercial vessels since July 14, as Iran claims the Strait of Hormuz is fully closed
- Goldman Sachs warned crude prices could reach $120 per barrel if shipping disruptions in the Middle East worsen
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Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Crude oil prices have climbed above $100 per barrel for the first time since July 23, as US military strikes on Iranian tankers and fears over the Strait of Hormuz sent global energy markets sharply higher.
By mid-Wednesday, Brent crude was trading at $100.6 per barrel, while West Texas Intermediate stood at $95.26. Murban crude moved considerably higher at $117.3 per barrel.
Source: Getty Images
US Strikes on Iranian Tankers Trigger Price Rally
The price jump followed US military action against three Iranian oil tankers over the weekend.
US Central Command said its forces targeted the M/T Downy, M/T Stark 1, and M/T Kylo after Iran's Islamic Revolutionary Guard Corps fired ballistic missiles at two American warships.
Admiral Brad Cooper said the strikes were meant to hit Iran where it hurts financially, BusinessDay reports.
He said:
"If you shoot at two of our ships, we will impose an even higher economic cost, taking out three of yours."
CENTCOM added that its naval blockade, which resumed on July 14, has redirected 92 commercial vessels, disabled three, and boarded two.
Iran Threatens Sharper Retaliation
Tehran has responded with strong warnings. Iranian parliament speaker Mohammad Bagher Qalibaf said future retaliation would exceed anything seen previously.
Mohsen Rezaei, secretary of Iran's Supreme National Security Council, announced plans to establish a new exclusion zone extending towards the Strait of Hormuz and into the Persian Gulf.
He said:
"Any ship that enters this area with the intention of passing through the Strait of Hormuz and is identified will be placed on our sanctions list."
Goldman Sachs Flags $120 Risk
Goldman Sachs has flagged the possibility of further price increases. Daan Struyven, co-head of global commodities research at the bank, told Bloomberg TV that "events over the last few days do suggest that the risk of shipping disruptions broadening and intensifying is an important one."
He said Goldman sees "meaningful upside to crude oil prices" and noted that supply shocks in natural gas and refined products could be even sharper.
He added:
"In gas and fuels, the supply shocks are bigger than in the crude market."
Source: Getty Images
What It Means for Nigeria
Higher crude prices carry mixed consequences for Nigeria.
On the positive side, with Brent above $100 per barrel, the government could earn more from oil exports, boosting foreign exchange inflows, strengthening public finances, and providing room to increase spending.
The upstream oil sector may also benefit, as improved economics could attract greater investment in exploration and production.
However, rising global crude prices can push up the cost of refined petroleum products. If international energy prices feed through into Nigeria's domestic fuel market, Nigerians could face higher petrol and transport costs.
Dangote raises petrol price 3 times in 9 days
Earlier, Legit.ng reported that Dangote Petroleum Refinery raised its Premium Motor Spirit gantry price by N65 on August 29, bringing the figure to N1,265 per litre and marking the third upward adjustment in less than two weeks.
The refinery had previously moved its PMS price from N1,165 to N1,185 per litre on August 20, then again to N1,200.
Taken together, the three increases added N100 per litre to the refinery's benchmark price in nine days.
Source: Legit.ng
