Global oil prices surged on Thursday as escalating geopolitical tensions between the United States and Iran pushed international benchmarks higher, raising fresh concerns about fuel landing costs and near-term price increases across Nigeria’s downstream market.
Brent crude crossed the $70 per barrel threshold, trading at $70.05, up 2.41 per cent, while US West Texas Intermediate (WTI) rose to $64.82, gaining 2.55 per cent. Nigeria’s Bonny Light crude hovered close to $69 per barrel, reflecting the broader rally across global oil markets.
The price jump marks the third consecutive session of gains, driven largely by fears that a potential US military action against Iran could disrupt crude supply from the Middle East, one of the world’s most critical oil-producing regions.
Iran Tensions Inject Risk Premium Into Oil Markets
Oil traders added a fresh risk premium to prices after renewed threats from US President Donald Trump over Iran’s nuclear programme. The White House warned that time was running out for Tehran to reach a nuclear agreement, while US naval forces increased their presence in the Middle East.
Iran remains a major global producer, pumping about 3.2 million barrels per day, and sits along the Strait of Hormuz, a vital shipping route through which roughly 20 per cent of global crude supply passes. Any disruption along this corridor could immediately tighten global supply.
Analysts noted that while temporary outages in Kazakhstan and weather-related shutdowns in the United States contributed to the rally, geopolitical risk remains the dominant driver of the current price surge.
At the same time, US crude inventories fell by 2.3 million barrels to 423.8 million barrels, further supporting prices and reinforcing bullish market sentiment.
Rising Crude Prices Signal Higher Fuel Landing Costs
The surge in Brent and other international benchmarks has direct implications for Nigeria’s fuel market.
Crude oil accounts for about 80 per cent of fuel landing costs, meaning any sustained rise in global prices immediately increases the replacement cost of imported petrol and diesel. With Brent now above $70, importers face significantly higher costs for new cargoes.
As a result, market watchers say the landing cost of Premium Motor Spirit (PMS) and diesel has already risen, even before fresh shipments arrive. This creates pressure on depot owners and importers to adjust prices upward to reflect the new cost environment.
Traders familiar with market movements said pricing decisions are typically driven by replacement economics, not past inventory costs. Once crude prices spike, downstream players move quickly to protect margins.
Depot, Import Prices Likely to Adjust Upward
With international benchmarks climbing and geopolitical uncertainty intensifying, indications suggest that depot owners and fuel importers may raise prices as early as today.
Nigeria’s crude production constraints further limit the country’s ability to cushion external shocks. Average crude output stood at about 1.45 million barrels per day in 2025, below Nigeria’s 1.5 million bpd OPEC quota, while December production slipped to 1.422 million bpd.
Although the government continues to pursue higher output targets through new licensing rounds and frontier basin exploration, near-term production gains remain limited. This leaves Nigeria highly exposed to global price movements.
With Brent crude now firmly above $70 and replacement costs rising, downstream operators are expected to pass higher costs through the supply chain, setting the stage for an imminent increase in depot and import prices—and potentially higher pump prices if the rally persists.
