Brent crude prices broke above $100 per barrel for the first time in nearly four years on Monday as the Iran conflict escalated.
At the time of filing this report, Brent crude rose 13.9 per cent to $105.60 per barrel while the US West Texas Intermediate (WTI) crude was trading at $100.66, up 10.7 per cent.
The rally follows a dramatic escalation in the conflict between Iran, the United States, and Israel over the weekend, with attacks on energy infrastructure and military targets across the region heightening fears that oil flows from the Middle East could be disrupted for weeks.
Israel struck major fuel storage facilities near Tehran, while Iran continued launching drone and missile attacks across the region. A drone strike damaged a desalination plant in Bahrain, a missile barrage injured five people in central Israel, and a seventh US service member died following an Iranian counterattack in Saudi Arabia.
Meanwhile, Iran’s Assembly of Experts named Ayatollah Mojtaba Khamenei, the son of the slain Supreme Leader Ali Khamenei, as the country’s new supreme leader early on Monday.
The appointment signals continuity in Iran’s hardline leadership, undermining the efforts of both the US and Israel to alter the regime.
The fears of prolonged supply disruptions, including potential attacks on regional energy infrastructure and tanker traffic, are now being priced in to markets. Energy traders are closely watching whether the conflict will affect production or exports from major Gulf producers.
The surge in crude prices has also strengthened the US Dollar and raised fears of an energy-driven inflation shock, particularly for major oil-importing economies.
For Nigeria, which is Africa’s largest oil producer, the development has led to worries with higher prices sparking higher petrol cost, with the pump price currently retailing for as low as N1,025 and as high as N1,200 per litre across some fuelling stations.
Last week, an analysis forecast that Nigeria would be one of the winners of the windfall with prices at $85 per barrel, but with prices now at three-digit values, the dimension has changed.