Global oil prices continued their upward trajectory this week amid escalating tensions between Iran and Israel, with both nations launching retaliatory strikes that have damaged critical energy infrastructure in the region.
As of the latest market update, Brent crude was trading at $74.25 per barrel, while West Texas Intermediate stood at $73.10 per barrel. Nigerian crude futures, including Brass Rivers and Qua Iboe, were valued at $77.09 and $77.14 per barrel respectively.
Critical Infrastructure Damage
The price surge follows Iran's weekend strike on Israel's Haifa Refinery, which has a production capacity of 197,000 barrels per day. Bazan, the refinery operator, confirmed on Sunday that while the main refining facilities remain operational, several downstream facilities have been shut down.
"The refining facilities continue to operate, while some downstream facilities at the complex have been shut down," Bazan stated in an official communication.
Israel swiftly retaliated by targeting two critical gas treatment facilities in southern Iran, further escalating tensions and disrupting energy operations across the Middle East.
Market Implications
Richard Joswick, S&P Global Commodity Insight's head of near-term oil analysis, warned of significant market disruptions, particularly for China, Iran's primary oil customer.
"If Iranian crude exports are disrupted, Chinese refiners, the sole buyers of Iranian barrels, would need to seek alternative grades from other Middle Eastern countries and Russian crudes," Joswick explained.
He added that such disruptions could "boost freight rates and tanker insurance premiums, narrow the Brent-Dubai spread, and hurt refinery margins, particularly in Asia."
The shipping industry has already begun responding to the heightened risks. Tanker owners are reportedly refusing to send vessels to the Persian Gulf and are withdrawing ships already in the region.
The chief executive of Frontline, the world's largest tanker operator, succinctly summarized the situation: "Trade is going to become more inefficient, and, of course, security has a price."
Conflict Escalation
The current round of hostilities began on Friday when Israeli forces attacked an Iranian nuclear site. Iran responded with strikes on major Israeli cities, prompting Israel to launch further attacks on Tehran and other Iranian urban centers.
BenriNews reports that the Centre for the Promotion of Private Enterprise has outlined both potential benefits and risks of the Israeli-Iran conflict for the Nigerian economy, which remains heavily dependent on oil exports.
As tensions continue to simmer in the Middle East, global energy markets remain on high alert, with analysts closely monitoring developments that could further impact supply chains and price stability.
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