LAGOS — Global oil prices surged to $100 a barrel on Wednesday for the first time since July, adding fresh pressure to already volatile petroleum product prices in Nigeria as renewed military confrontation in the Middle East intensified fears of prolonged disruption to crude and fuel supplies.

Brent crude, the global benchmark, rose 2.83 per cent to $100.70 a barrel on Wednesday afternoon, extending a sharp rally triggered by escalating attacks involving the United States, Iran and the Iran-backed Houthi movement in Yemen.

The latest surge presents another potential headache for Nigerian consumers and businesses, who are still grappling with high and unstable prices of petrol and other petroleum products.

In Nigeria, petrol prices are currently trading at about ₦1,245 to ₦1,300 per litre in many markets, although prices vary by location and filling station.

Because crude oil is the principal feedstock for refining, sustained increases in international crude prices can raise the cost of imported refined products and influence domestic pump prices, particularly when exchange-rate movements, freight costs, insurance, taxes and local supply conditions are also taken into account.

For an economy where transportation, logistics, electricity generation and manufacturing remain heavily dependent on petroleum products, another sustained oil-price shock could quickly feed into the wider cost of doing business and household expenses.

Strait of Hormuz becomes focal point

The latest escalation has intensified concerns over the security of the Strait of Hormuz, one of the world’s most important energy chokepoints.

About one-fifth of global oil and liquefied natural gas shipments normally pass through the waterway, making any sustained disruption potentially significant for crude prices, freight rates, insurance premiums and global energy supply chains.

Before the latest US-Israeli conflict with Iran began in February, Brent had been trading at roughly $70 a barrel. The benchmark has since climbed sharply as attacks on commercial shipping and military confrontation have increased the risk of prolonged disruption to energy flows.

The market’s latest move reflects growing concern that the conflict could spread beyond military targets to critical oil infrastructure and shipping routes.

US strikes Iranian tankers

The US military’s Central Command (Centcom) said its forces struck five Iranian oil tankers in the latest escalation.

According to Centcom, four of the vessels — Kaviz, Charminar, Horizon 1 and Riesco — were destroyed in the Gulf of Oman, while a fifth, Derya, was struck near Kharg Island in the northern Gulf.

Kharg Island is a major Iranian oil-export hub, making the reported strike particularly significant for energy markets.

Centcom said the crews were directed to abandon the vessels before the attacks and that the strikes followed Iranian ballistic-missile attacks on a US warship.

It said the American warship successfully evaded the missiles and that no US personnel were injured.

Iran’s Islamic Revolutionary Guard Corps (IRGC), however, gave a different account, saying its forces had attacked US military assets and commercial shipping in retaliation.

The IRGC also claimed that its naval forces attacked two US Navy destroyers and eight oil tankers in the Strait of Hormuz. The US military rejected the claim that its warships had been hit.

The competing accounts could not immediately be independently verified.

Iran threatens wider shipping restrictions

The prospect of further restrictions on commercial shipping has added to market anxiety.

An IRGC spokesman said Iran would soon announce coordinates for a new “prohibited zone” extending from the Sea of Oman into part of the Arabian Sea along a route leading towards the Strait of Hormuz.

He warned that vessels entering the area without coordination would face sanctions.

Such a move, if implemented and enforced, could significantly increase the risk premium attached to shipments through the region and potentially push up tanker insurance, freight costs and the price of crude delivered to international markets.

The UK Maritime Trade Operations agency also reported that several merchant vessels in the northern Gulf and Gulf of Oman had been subjected to disabling fire amid continuing military activity.

It said another vessel near Port Rashid in the United Arab Emirates was seen listing while anchored, possibly following damage from an unidentified projectile.

Iraqi authorities separately reported extinguishing a fire aboard the Panama-flagged tanker New Andros, which was carrying about two million barrels of fuel oil when it was struck by a drone in the Gulf.

Houthi attacks deepen supply concerns

The conflict has also intensified on the Arabian Peninsula, with Yemen’s Iran-backed Houthis and Saudi Arabia exchanging attacks.

Saudi authorities said Houthi drones and missiles targeted civilian and economic sites in the southern cities of Abha, Khamis Mushait, Jazan and Najran on Tuesday.

The attacks reportedly caused fires at oil facilities and temporarily disrupted operations, further raising concerns about the vulnerability of Saudi energy infrastructure.

Saudi authorities said 73 civilians were injured in the attacks.

The Houthis, meanwhile, reported more than 50 Saudi air strikes on Wednesday across areas under their control in Yemen, including Marib, Jawf, Taiz, Hudaydah, Saada and Bayda.

There was no immediate response from the Saudi military to those claims.

The confrontation comes amid renewed fighting along Yemen’s southwestern coast, where the Houthis have sought to expand their control towards the Bab al-Mandab Strait, another strategically important maritime route connecting the Red Sea with the Gulf of Aden.

Nigeria faces renewed downstream pressure

For Nigeria, the oil-price rally presents a complicated picture.

As a major crude producer, higher international oil prices can increase government and upstream-sector revenues. However, the benefits can be diluted by the country’s exposure to imported refined products and the cost of moving petroleum products through an increasingly expensive global shipping environment.

Nigeria’s downstream market has already been experiencing significant price volatility following the removal of fuel subsidies, exchange-rate adjustments and changes in international product prices.

A prolonged increase in crude prices could therefore put additional pressure on petrol, diesel and aviation fuel prices if international refined-product prices rise in tandem.

Higher pump prices would have consequences far beyond the filling station.

Transport operators typically pass increases in fuel costs through to passenger fares and freight charges, while manufacturers face higher logistics and energy expenses. Those additional costs can eventually filter into food prices, consumer goods and other essential services.

For businesses, the combination of higher crude prices, elevated fuel costs and currency pressures could further squeeze operating margins.

Dangote Refinery could cushion some exposure

Nigeria’s expanding domestic refining capacity, particularly the ramp-up of the Dangote Petroleum Refinery, provides a potential buffer against external supply shocks.

Greater domestic refining reduces the country’s dependence on imported petrol and other refined products and can shorten the physical supply chain between crude feedstock and domestic consumers.

However, domestic refining does not completely insulate Nigeria from international oil-price movements.

Refiners still face the cost of acquiring crude, financing operations, maintaining plants, importing equipment and securing other inputs. In a liberalised market, international crude and product prices also remain important reference points for commercial pricing.

Consequently, a sustained move in Brent towards or above $100 could still influence the economics of Nigeria’s downstream market, even as domestic refining capacity expands.

Market watches next moves

The immediate question for energy traders and policymakers is whether Brent’s move above $100 will prove temporary or become the beginning of another prolonged oil-price cycle.

The answer will depend heavily on the duration and geographical spread of the conflict, the extent of damage to energy infrastructure, the security of shipping through the Strait of Hormuz and Bab al-Mandab, and whether major producers can compensate for any supply losses.

For Nigeria, the developments reinforce the economic importance of accelerating domestic refining, strengthening petroleum-product supply chains and reducing the vulnerability of consumers and businesses to international energy shocks.

With crude now back at the psychologically important $100-a-barrel threshold, any further escalation around the Gulf could translate into another round of pressure on global fuel markets — and potentially make Nigeria’s already difficult downstream price environment even more challenging.

BBC report with Addition from olusola Bello