Middle East War: Oil prices to rise past $90 per barrel after U.S. strikes on Iran

By Ebenezer William

There were predictions that crude prices would rise to more than $90 per barrel from over $70 per barrel this week, following the United States’ attack on Iranian facilities.

The United States launched targeted strikes on three Iranian nuclear facilities, a move President Trump hailed as a “spectacular military success”, which has significantly escalated Middle East tensions.

Iran is a major oil-producing and -exporting nation and a founding member of the Organisation of Petroleum Exporting Countries (OPEC).

Already, the Israel-Iran conflict has pushed crude prices to $79 per barrel from over $68 per barrel in the past few weeks as tension escalates in the Middle East.

According to some oil experts who carefully observed the trend of events in the middle east:

“Crude oil buyers, whether traders or refiners, invariably start with speculation about their ability to meet demand requirements, which could become real, thereby falling into the realm of actual shortages, which in turn translate to increases in prices resulting from a supply-demand imbalance.

“Two things could happen with Iran — oil production disruption and/or blocking the Strait of Hormuz, a critical shipping waterway for oil vessel movements to Western consuming countries. Unless the crisis is contained very soon, an increase in crude oil prices is almost a certainty.”

Similarly, Prof. Wumi Iledare, a professor of petroleum economics, said, “The U.S. strike on Iranian facilities might inject a short-term geopolitical risk premium into global oil prices. However, unless there is a tangible disruption to physical supply — particularly through the Strait of Hormuz — sustained price escalation remains uncertain.

“For Nigeria, while higher crude prices could momentarily boost export revenues, they also risk fuelling domestic inflation and encouraging fiscal complacency. Given historical precedents, a prolonged oil windfall without structural reforms could deepen macroeconomic vulnerabilities and make recovery from policy missteps increasingly difficult in Nigeria.”

Director/Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, had said, “The outbreak of war between Israel and Iran has added a troubling dimension to the challenges of an already floundering global economy. Economies around the world are currently grappling with elevated geopolitical tension triggered by the Russia-Ukraine war and the Israel-Hamas conflict. There is also the profound uncertainty created by the unprecedented tariff disruptions by the Trump administration.

“The surge in crude oil prices would impact foreign exchange earnings, oil being the biggest forex earner for the country. This would even be more impactful if output performance improves. Crude oil price has surged to $75 per barrel, which is about 15% higher than before the outbreak of the Israel–Iran conflict. This development would also positively impact the country’s foreign reserves, ensure better forex liquidity and ultimately the stability of the naira exchange rate.

“The oil sector currently accounts for about 50% of government revenue. An improvement in crude oil prices would therefore have a significant impact on government revenue. An improvement in revenue would positively impact fiscal consolidation and hopefully moderate the growth of the fiscal deficit.”