There are indications that crude oil prices may soon rise above $90 per barrel following the escalation of the Israeli–Iranian war.
The price hit $77 per barrel last weekend but following the attack on Iran by the United States of America on Sunday it dropped to $71 per barrel.
The Chairman of International Energy Services Limited, Dr. Diran Fawibe, during a weekend interview said, “Fundamentally, it is axiomatic that any disruption or restrictions in the flow of oil in the arteries of international market will invariably lead to spike in crude oil prices.
“Crude oil buyers whether traders or refiners invariably start with speculation about ability to meet their demand requirements which could become real thereby falling into the realm of actual shortages which on turn translates to increases in prices resulting from supply demand imbalance.
“Two things could happen with Iran, oil production disruption and or blocking the Straits of Hormuz, a critical shipping waterway for oil vessels movement to western consuming countries. Unless the crisis is contained very soon, increase in the crude oil prices is almost a certainty.”
Meanwhile Prof. Wumi Iledare, a Professor of Petroleum Economics, said, “The U.S. strike on Iranian facilities might inject a short-term geopolitical risk premium into global oil prices. However, unless there is a tangible disruption to physical supply-particularly through the Strait of Hormuz-sustained price escalation remains uncertain.
“For Nigeria, while higher crude prices could momentarily boost export revenues, they also risk fuelling domestic inflation and encouraging fiscal complacency. Given historical precedents, a prolonged oil windfall without structural reforms could deepen macroeconomic vulnerabilities and make recovery from policy missteps increasingly difficult in Nigeria.”
Director/Chief Executive Officer, Centre for the Promotion of Private Enterprise, CPPE, Dr. Muda Yusuf, said, “The outbreak of war between Israel and Iran has added a troubling dimension to the challenges of an already floundering global economy.
“Economies around the world are currently struggling with increasing geopolitical tension triggered by the Russian-Ukraine war, the Israel-Hamas conflict and Israeli-Iranian conflict. There is also the profound uncertainty created by the unprecedented tariff increase by the trump administration.
“The surge in crude oil price would impact on foreign exchange earnings, oil being the biggest forex earner for the country.
“This would even be more impactful if output performance improves. Crude oil price has surged to $75 per barrel which is about 15% higher than before the outbreak of the Israeli-Iran conflict. This development would also positively impact the country’s foreign reserves; ensure better forex liquidity and ultimately the stability of the naira exchange rate.
“The oil sector currently accounts for about 50% of government revenue. An improvement in crude oil price would therefore have a significant impact on government revenue. An improvement in revenue would positively impact fiscal consolidation and hopefully moderate the growth of the fiscal deficit.”
