Israeli-Iran conflict triggers petrol price hike as crude oil hits $74 per barrel

The ongoing conflict between Israel and Iran has led to a significant increase in petrol prices by 10 marketers, following an 8.8 percent rise in crude oil prices to $74 per barrel from $68 per barrel.

Crude oil prices are expected to rise further if Iran carries out its threat to block the Strait of Hormuz, a critical waterway responsible for the shipment of over 20 percent of global oil and gas supplies. Maritime sources warn that such a blockade would severely disrupt global trade.

The 10 oil marketers that adjusted their depot prices include Aiteo, Pinnacle, Dangote, MENJ, Swift, Rainoil, First Royal, Emadeb, First Fortune, and Ever.

Emadeb made the highest price adjustment, increasing its depot price from N827 to N845 per litre, representing a 2.18 percent hike. Ever made the smallest increase, adjusting prices marginally from N866 to N870 per litre, a 0.46 percent rise.

Other marketers’ price changes are as follows: Aiteo raised its price from N835 to N840 per litre; Pinnacle increased from N829 to N845; Dangote Petroleum Refinery from N830 to N840; MENJ from N810 to N850; Swift from N830 to N845; and Rainoil (Lagos) from N840 to N850 per litre.

First Royal and First Fortune also adjusted prices, with First Royal moving from N826 to N838 per litre, and First Fortune from N850 to N860 per litre.

According to Petroleumprice.ng, petrol depot prices are expected to continue rising in the coming weeks due to ongoing instability in the global oil market.

On Tuesday, June 16, fears mounted that escalating attacks and counterattacks could prolong instability, negatively impacting the global oil sector.

OPEC has noted that beyond petroleum, Iran possesses substantial reserves of natural gas, coal, chromium, copper, iron ore, lead, manganese, zinc, and sulfur.

While the United States has urged calm, Iran has promised a “harsh response,” escalating uncertainty in the oil market.

Global banking giant JP Morgan forecasts that, depending on the crisis’s trajectory, crude oil prices could range between $120 and $130 per barrel if worst-case scenarios—such as a military conflict or closure of the Strait of Hormuz—occur. Their base-case forecast for 2025 oil prices is above $60 per barrel.

Dr. Muda Yusuf, Director and CEO of the Centre for the Promotion of Private Enterprise (CPPE), highlighted the mixed economic impacts on Nigeria from the Israeli-Iran conflict.

“The outbreak of war between Israel and Iran has added a troubling dimension to an already struggling global economy,” Dr. Yusuf said. “Crude oil prices surged to $75 per barrel from $65 per barrel just a week prior, a 15 percent jump within days, which has clear consequences for global petroleum product prices.”

He explained that higher energy costs would drive inflation by increasing production, logistics, transportation, and power generation expenses, all of which are likely to be passed on to consumers. This global inflation effect is expected to increase imported inflation in Nigeria.

Dr. Yusuf warned that monetary authorities may respond to these inflationary pressures with tighter policies, including higher interest rates, potentially reducing portfolio flows and impacting foreign reserves. He noted that Nigerian companies with supply links to the Middle East may be particularly vulnerable during this period of instability.

“Higher oil revenues could lead to increased money supply and inflation risk, as well as exchange rate depreciation,” he added. “A tighter monetary stance might follow, potentially causing difficult credit conditions.”

Global stock markets reacted negatively on Tuesday, June 16, with indices such as the Dow Jones, S&P, and Nasdaq trending down as investors sought safe-haven assets. However, Nigeria’s stock market is expected to perform positively, historically correlating with crude oil price movements and GDP growth.

Dr. Yusuf also pointed out that if the conflict persists, Nigeria may benefit from increased foreign exchange earnings and improved fiscal revenue, given the oil sector accounts for approximately 50 percent of government revenue.

Professor Wumi Iledare, a petroleum economist and former president of several energy economics associations, emphasized that while Nigeria stands to gain from rising oil prices nearing $90 per barrel, long-term benefits depend on fiscal discipline and structural reforms.

“Without improved refining capacity and subsidy management, temporary relief from higher prices may not translate into lasting economic transformation,” he said. “Rising oil prices could ease fiscal pressures and boost dollar liquidity, but reforms are essential to capture the full benefits.”

Olufemi Idowu, partner at Kreston Pedabo, cautioned that although government revenues may increase temporarily, gains could be limited due to prior crude oil sales used to secure loans and ongoing instability in the Niger Delta.

Idowu noted, “Our 2024 budget was based on $75 per barrel. Any price above that benefits Nigeria, provided production quotas are met and stability is maintained.”

He warned that downstream fuel prices are likely to rise following deregulation, with Dangote Refinery still purchasing crude at international prices, which could increase petrol pump prices and the cost of goods and services.

Finally, Mazi Colman Obasi, National President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), said the tension in the Middle East could be beneficial for Nigeria and other oil producers.

“The nation’s 2025 budget is based on $75 per barrel and over two million barrels per day output,” Obasi said, adding that crude oil prices are expected to remain above this benchmark amid ongoing geopolitical tensions.