Nigeria set for windfall as Middle East crisis likely to push oil prices closer to $100

THE early Saturday strikes by the United States and Israel in Iran have sent shockwaves through global oil markets, with analysts warning of potential price surges of $10 to $20 per barrel – closer to $100 – if the conflict continues to escalate. President Trump confirmed on Truth Social that Iran’s Supreme Leader, Ayatollah Ali Khamenei, was killed in the strikes, a claim later acknowledged by the Iranian government, raising fears of broader regional instability.

This is a boon for Nigeria which depends on oil revenue for infrastructure projects and payment of salaries. Nigeria earns 75 percent -90 percent of its revenue from oil. In the 2026 budget, crude oil price is pegged at $64.85 per barrel, with daily output estimated at 1.84 million barrels per day.

Oil markets reacted immediately to the news. Brent crude (BZ=F), the international pricing benchmark, rose roughly 2.9 percent to close at $72.80 per barrel on Friday, while West Texas Intermediate (WTI) crude (CL=F) climbed 2.8 percent to trade above $67 per barrel. Head of Geopolitical Analysis at Rystad Energy, Mr Jorge León, told Yahoo Finance that without any signs of deescalation over the weekend, prices could surge dramatically when markets reopen Sunday night, with Brent potentially reaching $90–$95 and WTI $80–$85.

“Most of the strategic initiative now lies with Iran,” León said. “How Tehran chooses to respond over the next 24–72 hours, especially toward energy infrastructure or regional shipping, will be the primary driver of near-term oil market dynamics.”

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The US and Israeli strikes targeted Tehran and several major Iranian cities after talks between US and Iranian negotiators collapsed on Thursday. Oman’s Foreign Minister, serving as a mediator, had said that ‘progress’ had been made and a deal was within reach, but the breakdown of negotiations intensified the likelihood of direct military confrontation.

Iran responded with immediate missile attacks on US military bases and infrastructure across the Gulf, including Bahrain, the UAE, and Kuwait. Saudi Arabia reported that its eastern oil-rich provinces were targeted, while airports in Riyadh, Dubai, and Kuwait were also affected. Within Tehran, the US struck the compound housing Ayatollah Khamenei’s primary residence.

A critical factor for oil markets is the Strait of Hormuz, through which roughly 20 percent of the world’s oil supply and a similar proportion of liquefied natural gas passes daily. Iran’s Islamic Revolutionary Guard Corps warned vessels that “no ship is allowed to pass the Strait of Hormuz.” While a full closure is unlikely, any disruption could sharply increase shipping risk premiums, pushing crude prices even higher. Several oil majors and trading houses suspended shipments through the Strait immediately after the US attacks.

Historically, US-Israel air strikes in Iran have caused short-term spikes in crude prices, but muted retaliation limited the long-term impact. This time, analysts say, Iran’s retaliation appears much broader, encompassing multiple Gulf states and critical military installations, which could sustain upward pressure on prices.

In a preemptive move, OPEC+ raised its production quota by 220,000 barrels per day on Sunday, exceeding the expected 137,000 bpd increase. León noted that while this adjustment may ease some short-term pressure, it is unlikely to counterbalance the geopolitical risk premiums now priced into the market. Iran, a founding member of OPEC+, produces roughly 3.4 million barrels per day, with 1 million–2 million barrels exported daily, primarily to China. Any further disruption of Iranian supply would exacerbate the tightness in global oil markets.

Analysts warn that if the conflict escalates to target energy infrastructure across the Gulf, Brent crude could surpass $100 per barrel, while WTI may approach $95, levels last seen during major Middle East crises. Traders are closely monitoring missile attacks, potential threats to oil tankers, and any signals of Iran blocking the Strait of Hormuz, all of which could drive extreme volatility in crude markets.

President Trump framed the strikes as a ‘massive and ongoing operation’ to destroy Iran’s nuclear capability, weaken its Navy, and dismantle proxy groups that receive funding from Tehran. While he did not explicitly say the US intends to topple the Iranian regime, his message encouraged internal opposition to the government, signaling that the military campaign could extend over weeks or months.

As energy markets await further developments, prices are expected to remain highly volatile, reflecting both immediate supply risks and long-term geopolitical uncertainty. Even if supply disruptions are limited, the psychological impact of attacks on Iran and its influence over the Strait of Hormuz is likely to keep crude prices elevated and trading ranges wide.