Oil prices jumped on Thursday after Iran warned that the ongoing war could expand to the Indian Ocean if the United States or Israel launches another attack, raising fresh concerns over the security of key energy and shipping routes.
Checks by Nairametrics show that Brent crude jumped more than 3% to touch a session high above $106 per barrel, while West Texas Intermediate (WTI) was trading near $94 per barrel at the time of filing this report.
The Indian Ocean is particularly important to global trade, with nearly 100,000 ships passing through the region annually.
It carries about 30% of global containerised cargo and accounts for roughly 42% of crude oil, petroleum products and distillates lifted from and within the region.
The latest warning has added another layer of uncertainty to an oil market that had begun to price in the possibility of diplomatic progress between Washington and Tehran following contacts between officials from both sides at the United Nations General Assembly.
Yahya Rahim Safavi, an adviser to Iran’s Supreme Leader Mojtaba Khamenei and former commander of the Islamic Revolutionary Guard Corps, warned that the geographical scope of the conflict could widen further if fighting resumes.
The warning has complicated hopes that diplomatic contacts between Iran and the US during this week’s UN General Assembly could help bring the conflict closer to an end.
However, President Trump’s address to the UN General Assembly on Tuesday kept the prospect of further escalation firmly on the table, even as he said a deal remained possible.
The latest developments have therefore left traders weighing the prospect of diplomacy against the risk of a wider conflict and further disruption to energy and shipping routes.
Thursday’s jump marks another sharp turn in oil prices within days, highlighting how quickly geopolitical developments are being reflected in the market.
WTI crude had lost about $2.10 to trade at $98.20 per barrel, while Brent crude declined by 2.04%, equivalent to $2.12, to trade at $101.75 per barrel on September 21 amid renewed diplomatic expectations and signs that Saudi Arabia was restoring some export capacity.
The sequence illustrates the competing forces currently driving the oil market, with prospects for improved supply on one side and the risk of wider disruption on the other.
The latest warning over the Indian Ocean introduces another potential source of supply and shipping risk at a time when oil markets are already dealing with disruptions around the Strait of Hormuz and Red Sea.
For Nigeria, a prolonged increase in international crude prices could keep pressure on petrol and wider energy costs, although movements in Brent do not automatically translate into immediate changes at the pump.
Nigeria’s downstream market is influenced by several variables, including the price of refined products, exchange-rate movements, refinery costs, transportation and distribution expenses, as well as the pricing decisions of refiners and marketers.
If the current oil-price increase persists, higher crude and refined-product costs could place additional pressure on transport operators, businesses and households, particularly if disruptions to major shipping routes raise freight, insurance and supply costs.
