Bonny Light swings back to $100 a barrel amid U.S.-Iran attacks

Bonny Light and other significant grades ended the day slightly higher despite the ongoing fire between Iran and the United States.

Market players are eagerly awaiting further developments in the peace talks and whether both parties can reopen the Strait of Hormuz as they discuss the specifics of the peace agreement.

Bonny Light is considered the benchmark crude oil grade in Nigeria.

Other significant crude oils produced in Nigeria are Qua Iboe, Forcados, Escravos, and Brass River. Nigerian crude is well-known for being “Light and Sweet.”

Most of Nigeria’s crude grades are sweet because they have a low sulfur content (less than 0.5%) and are less expensive and easier to refine into high-quality products such as gasoline and diesel.

Oil traders are preoccupied with the situation in and around the critical strait. Since the conflict began at the end of February, Iran has effectively blocked the crucial waterway through which a fifth of the world’s oil and gas flows, causing the largest supply disruption in history.

An initiative known as “Project Freedom” was started by the US earlier this week to assist commercial ships in passing through the strait safely, but it was later put on hold. In the meantime, to put pressure on Tehran, the US military has been blocking Iran’s ports and coastline since the middle of April.

Two empty oil tankers flying the Iranian flag that were trying to enter an Iranian port in the Gulf of Oman were shot at and rendered inoperable by US Central Command. Additionally, CENTCOM reported that on Wednesday, it disabled another empty tanker.

The US military claimed to have intercepted Iranian attacks on three US warships passing through the Strait of Hormuz the day before the CENTCOM update.

The US struck targets on Iran’s Qeshm port and the city of Bandar Abbas in and around the strait in retaliation for the attacks. The escalation of hostilities coincides with Iran’s declaration that it has not yet reached a resolution and is still considering a new one-page, fourteen-point proposal that might end the conflict. The new attacks, Trump told ABC News, were “just a love tap” and that the ceasefire between the US and Iran remained “in effect.”

Nigeria’s domestic fuel prices are rising in tandem with international prices, despite being Africa’s largest oil producer. Nigerian petroleum marketers have continually been adjusting retail positions in anticipation that the increase may cause pump prices to rise in the upcoming days, especially in Nigeria’s major cities.

This means the refinery will need to import about 71% of its crude requirements for May. The gap underscores the persistent challenge of reconciling export revenues with domestic energy self-sufficiency, with state-owned refineries largely offline since 2020. This situation points to the tensions between Nigeria’s naira-for-crude policy and its energy objectives.

Nigeria’s food inflation rate is likely to be negatively affected as fertilizer prices rise, leading to higher food prices and putting inflation in jeopardy, given its recent five-year low in February.– Currently, crude prices suggest the market expects crude oil to reach $90 by the end of June, a scenario driven by low crude supplies.