Oil climbs above $110 as Iran war tightens global supply

OIL markets have surged back into bullish territory, with Brent crude rising above $110 per barrel as geopolitical tensions intensify around the Strait of Hormuz. Iran’s rejection of U.S. proposals and continued delays in negotiations have reinforced expectations of prolonged supply disruptions, pushing traders to price in a difficult scenario, reported Oilprice.com.

As of Tuesday morning (11.16pm) Nigerian time, Brent surged 2.17 percent to $115 per barrel, while West Texas Intermediate (WTI) was priced $104.3. Murban climbed 4.37 percent to $120.9.

At the center of this rally is the escalating diplomatic deadlock between Tehran and Donald Trump. While the U.S. administration extended its deadline for Iran to reopen the Strait by another 10 days to April 6, optimism over negotiations appears misplaced. Iran has formally dismissed Washington’s 15-point peace framework, presenting its own demands instead, signaling that a quick resolution is unlikely and that supply risks will persist.

Beyond the Gulf, supply shocks are emerging across multiple regions. In Russia, Ukrainian drone strikes have disrupted key Baltic export terminals, including Ust-Luga and Primorsk, potentially affecting up to 40 percent of the country’s seaborne crude exports. This raises the likelihood of force majeure declarations and further tightens global crude availability.

READ ALSO: Kuwait cuts oil production as Qatar warns prices could hit $150

Meanwhile, Iraq’s production has collapsed dramatically, down nearly 80 percent since the start of the U.S.-Iran conflict. Output from southern oilfields has dropped to around 800,000 barrels per day, with total offline capacity estimated at 3.5 million b/d. Storage constraints and logistical bottlenecks are compounding the decline, removing a major supply buffer from the market.

Asia’s energy landscape is also shifting under pressure. India is reportedly in advanced talks with Russia to resume LNG imports amid a deepening gas shortage, even as Reliance Industries publicly denied any renewed purchases of Iranian crude. In parallel, China’s LNG demand has weakened sharply, with imports projected to fall 25 percent year-on-year due to high prices and reduced Qatari supply.

Operational disruptions are adding to the strain. Shell confirmed significant damage to its Pearl gas-to-liquids facility in Qatar following a drone attack, with part of the plant expected to remain offline for up to a year. In the U.S., Valero Energy has partially restarted its Port Arthur refinery after an explosion, though some units remain shut, limiting full capacity utilisation.

Security risks are also rising in maritime routes. A Turkish-owned tanker was struck by a marine drone near the Bosphorus Strait, marking another escalation in attacks on energy infrastructure and shipping. These incidents are driving up insurance premiums and adding further cost pressures to global oil trade.

Interestingly, some byproducts are benefiting from the turmoil. Sulphur prices in China have surged above $600 per metric tonne, nearly tripling year-on-year, boosting refinery margins as processors pivot toward sour crude grades to maximise output.

Responses

Governments worldwide are responding with policy adjustments. Japan is increasing its reliance on coal to stabilise power supply as LNG costs soar, while South Korea has imposed export controls on naphtha to protect domestic petrochemical industries. Indonesia is considering loosening production quotas for key commodities like coal and nickel if elevated prices persist.

Closer to home, Nigeria is moving quickly to capitalise on the price rally. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has accelerated approvals for restarting idle oil wells, aiming to ramp up production and take advantage of crude prices above $100 per barrel.

Nigeria hasn’t done much

But Nigeria under President Bola Tinubu has failed to provide support for refiners or palliatives for the consumers. While Nigerian citizens suffer from energy-induced pains, President Bola Tinubu isn’t moved. Finance Minister Wale Edun said last Wednesday that the Nigerian government would not control petrol prices. Instead, he said, the government would introduce measures to cushion the economic impact of the war involving the United States, Israel, and Iran.

READ ALSO: Brent price hits $109 as Tinubu’s govt slows palliatives for the poor

Edun further said that President Bola Tinubu had already announced plans to provide an additional 100,000 Compressed Natural Gas conversion kits to help motorists switch from petrol to CNG, which cost about 25 percent to 30 percent of the price of petrol.

“When there is market failure is where the regulator steps in. But in terms of balancing pricing, what we are looking to do is to manage the disruption and we don’t know how permanent or temporary it could be,” Edun said.

“But in the meantime, rather than reverting back and taking backward steps, we’ll look at every other measure that we have that can help the cost of living of Nigerians.”

However, Edun, like most people in Tinubu’s government, ended up simplying a complex problem by thinking that simply releasing CNG conversion kits would help motorists switch from petrol to CNG.

Edun failed to simply tell Nigerians the truth about the government’s failing CNG programme. Economy Post found that there are few CNG refuelling stations and conversion centres in Nigeria. Also, the conversion is expensive and runs into hundreds of thousands of naira.

Also, several mechanics lack the skills and specialised tools required for CNG conversion. More so, the gas price is no more cheap, given the Middle East crisis, which has disrupted the global supply.

While Mr Edun and the Nigerian government simplify a complex phenomenon, several families can’t afford to buy gas or petrol. Transport costs have jumped in several Nigerian cities, while households increasingly resort to the use of firewood and crude sources of energy.

Only 15 million households have received the conditional cash transfer, according to Edun, which is just a drop in the ocean. The World Bank said in its ‘Nigeria Development Update’ released in October 2025 that though growth had picked up and revenues and reserves rising, poverty was skyrocketing in Africa’s most populous nation.

“In 2025 we estimate that 139 million Nigerians live in poverty. So the challenge is clear, how to translate the gains from the stabilisation reforms into better living standards for all,” said World Bank’s Country Director, Mr Mathew Verghis.

This means that Tinubu’s government has only provided cash transfer support for just 10.8 percent of Nigeria’s poor. Even at that, analysts say the cash transfer is just throwing money at a problem, noting that it neither reduces poverty nor guarantees enduring satisfaction.

READ ALSO: Iraq engages Iran over Strait of Hormuz oil passage

“My own take is that Tinubu’s government rushed to liberalise the petrol market without planning for its consequences,” said international economist, Dr Lilian Duke-Whyte. “The Middle East crisis has now further raised the petrol price, pushing more people into poverty. Despite this, we are yet to see commensurate programmes targeted at reducing poverty. It has been price hikes from cost of transfers to price of fuel, to tax, to transport, to cost of rent, to cost of electricity.”

Harvard-trained economist, Mr Nonso Mbah, wondered why the Bola Tinubu’s government seems to be elitist, without caring for the plights of Nigeria’s poor.

“What stops the government from providing affordable buses for workers? We have 39 million micro, small and medium enterprises in Nigeria, what stops the government from provising funding for 20 million to 30 million of these businesses. I know we are cash-strapped, but what is Nigeria doing with its oil windfall or revenue increases from tax? Okay, why not do food banking? Why not provide succour to the poor to ameliorate the poverty in the land.”