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•Crisis raises risks for Nigeria — S&P Global
By Adewale Sanyaolu
Global oil prices plunged sharply on Monday amid confusion over potential talks between the United States and Iran. Brent crude, the international benchmark and Nigeria’s crude grade, fell more than 7% to around $104 a barrel after earlier spiking above $114.
At one point, the decline had exceeded 13%.
US benchmark, West Texas Intermediate (WTI), dropped 6.9% to $91.4 a barrel, down from highs near $100 earlier in the session.
Despite Monday’s steep sell-off, crude remains over a third higher than pre-conflict levels following the February 28 attacks on Iran by US and Israeli forces.
The market was rattled by comments from former President Donald Trump, who claimed that the United States and Iran had engaged in “very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East.”
In a social media post, Trump said he had directed the US Department of War to postpone “any and all” military strikes against Iranian energy infrastructure for five days, contingent on the progress of ongoing discussions.
“These talks will continue throughout the week,” Trump added, framing the announcement as a potential step toward de-escalation.
Iran, however, rejected the claims outright. State-affiliated media outlets, citing the Iranian Foreign Ministry, dismissed Trump’s statement as false, accusing him of trying to manipulate global oil markets and buy time. Officials insisted that no formal dialogue with Washington had taken place.
The conflicting narratives sent shockwaves through energy markets, creating extreme volatility.
Traders scrambled to digest the contrasting messages, driving sharp swings in crude prices in a single trading session. Analysts warn that uncertainty over US-Iran relations, combined with geopolitical risks in the Middle East, could continue to fuel dramatic price movements in global energy markets.
Monday’s events highlighted the fragile balance in oil markets, where even unverified claims of diplomacy, or threats of military action, can trigger massive swings.
While investors monitor potential negotiations, the volatility highlights the wider risks facing an energy market still reeling from geopolitical tensions.
As the crisis rages, Director, Energy Advisory at S&P Global Commodity Insights, Karim Fawaz, warned that the crisis extends beyond crude supply disruptions to a broader breakdown in refined products markets globally.
Fawaz described the unfolding situation as a “cascading crisis,” noting that refining systems, not just crude flows, are highly exposed. According to him, more than half of global refining capacity is directly or indirectly affected due to reliance on crude and feedstocks from the Middle East.
He emphasised that refined products such as jet fuel, diesel, and petrochemical feedstocks are particularly vulnerable, with global trade flows already showing strain.
“Nearly 40 per cent of Europe’s jet fuel imports and close to 50 per cent of Africa’s jet fuel imports are tied to the Middle East,” Fawaz noted, adding that petrochemical markets, especially in Asia, are heavily dependent on supplies from the region.
Fawaz outlined two possible scenarios: a base case where disruptions ease within weeks, and a more severe “oil shock” scenario where flows remain constrained for months.
Under the base case, crude prices could temporarily spike before stabilising.
However, in a prolonged disruption, he warned that oil prices could surge to between $180 and $200 per barrel, remaining above $100 through the end of 2026.
In such a scenario, he said, “significant demand destruction” would occur as economies struggle to cope with sustained high energy costs.
For Nigeria, which relies heavily on crude exports for revenue but imports a large share of refined petroleum products, the implications are mixed but largely challenging. While higher crude prices may boost government earnings, rising costs of imported fuels could worsen inflation, increase subsidy pressures, and strain foreign exchange reserves.
On the shipping side, Vice President and Global Head of Shipping, Metals and Mining at S&P Global, Rahul Kapoor, painted a dire picture of maritime disruptions in the region.
Kapoor revealed that the Strait of Hormuz is effectively “functionally constrained,” with about 3,200 vessels impacted, including roughly 850 energy tankers.
Of these, he said around 400 fully loaded tankers carrying an estimated 125 million barrels of oil are currently stranded.
“This is not a scenario most market analysts had built into their base case. It represents one of the most severe energy supply disruptions in recent history,” Kapoor said.
He added that shipping costs have surged dramatically, with tanker rates in some cases hitting $500,000 per day, while marine fuel prices have doubled to about $1,200 per tonne in key hubs like Singapore.
Insurance has also emerged as a major bottleneck, with war-risk premiums spiking sharply, making it difficult for shipowners and charterers to operate.
Kapoor further noted that some vessels are now navigating unusually close to Iranian waters, suggesting increased control by Tehran over transit routes.
While historical conflicts in the region did not fully shut down the Strait, he stressed that the current situation is different due to the scale of disruption and the number of vessels already trapped.
Even in an optimistic scenario involving a ceasefire, Kapoor said clearing the backlog of stranded vessels could take at least one to two weeks. However, a full normalization of shipping operations could stretch into months.
For Nigeria and other African economies, the disruption poses significant risks which include:higher fuel import costs due to rising global refined product prices, aviation sector pressure from increased jet fuel prices.
Others are: inflationary spikes driven by energy costs, potential windfall revenues from crude exports — but offset by downstream inefficiencies.
The heavy reliance of African markets on imported refined products makes the region particularly vulnerable to supply shocks originating from the Middle East.
As the crisis unfolds, analysts say Nigeria’s ability to cushion the impact will depend on the performance of its domestic refining capacity and policy responses to rising global energy prices.
With uncertainty lingering around the duration of the disruption, market watchers at CERAWeek warn that the global energy system may be entering a prolonged period of volatility not seen in years.
