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Petrol pump prices may increase as the Middle East crisis worsens, according to an economist.
Iran has been submerged in a dilemma inflicted upon it by the United States and Israel after the duo launched a military action against Iran on Saturday. In retaliation, Iran fired drone and missile attacks targeted at US bases across the Gulf.
It has also warned ships against passing the Strait of Hormuz, a strait between the Persian Gulf and the Gulf of Oman where major oil exporters in the Middle East, including Saudi Arabia, Iraq, Kuwait, Iran, and the UAE, use it to transport crude to global markets.
Analysts say this move could affect crude oil exports and imports and possibly increase crude oil prices.
Kelvin Emmanuel, while speaking on Arise News on Sunday, explained that the U.S. is trying to play a game where it can stop crude oil supply, ship crude oil supply to China and stop the technical support that Iran provides to Russia in a triangle that involves Venezuela, Iran, Russia and China
“For years, Iran has been under sanctions from the West and is not able to do any official bank transactions and bring the crude oil to the official markets. Russia and China have been major sources of support for this crude oil, giving it a competitive advantage against modern refiners around the world. So this is the cycle and this is the historical antecedents. But what will typically happen over the next 24, 48 to 72 hours is that, number one, 20.7 million barrels of crude pass through the Straits of Hormuz,” he explained.
The economist added that if the Iranian Revolutionary Guards and SAVAK still have serious control over the government in Iran by Monday, despite the assassination of Ayatollah Khamenei, crude oil prices will jump.
According to him, this would impact Nigeria positively and negatively. On the one hand, an increase in global crude oil prices would result in higher revenue for Nigeria, an oil-exporting country.
Despite being a crude oil producer, Nigeria imports refined petroleum products. Emmanuel added that an increase in crude oil prices would lead to higher prices for petroleum products.
“Crude oil prices will go up. The implication for Nigeria is that government revenue will increase because the government benchmark for crude oil prices is about $64.85 per barrel under the 2026 Appropriations Act,” Emmanuel explained.
“You know, but on the other hand, if crude oil prices go up, the price of petroleum products will go up because we’re now in the post-subsidy era and any increase in the price of crude oil means that the refinery, for example, Dangote Refinery, is going to have to revise its price based on its cracking margins on the realities we have on the ground today.”
