The price of crude oil jumped more than $4 a barrel on Friday, hitting its highest price in almost five months after Israel struck Iran.
Brent crude futures jumped $4.60, or 6.63 per cent, to $73.96 a barrel by 0612 GMT after hitting an intraday high of $78.50, the highest since 27 January. US West Texas Intermediate crude was up $4.99, or 7.33 per cent, at $73.03 a barrel after hitting a high of $77.62, the highest since 21.
A statement released by the White House earlier on Friday said, “Tonight, Israel took unilateral action against Iran.”
The strikes immediately triggered a sharp reaction in global markets, as traders factored in the potential for significant supply disruptions from a region responsible for about one-third of global oil production.
Any rise in price favours Nigeria, which relies mostly on oil for its revenue and foreign earnings. The Nigerian government had benchmarked $75 per barrel on more than two million bpd, including condensate, in the 2025 budget, to achieve its revenue projection.
Speaking to newsmen on Friday, the Director of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, said the impact of rising oil prices on Nigeria’s economy is a double-edged sword.
Mr. Yusuf explained that higher oil prices could lead to increased foreign exchange earnings for Nigeria, given that oil remains the country’s biggest source of foreign exchange.
According to him, while the increase in oil prices presents opportunities for increased foreign exchange earnings and revenue, it also poses significant challenges, particularly regarding energy prices and inflation.
“It is going to affect us because oil is still our biggest source of foreign exchange. It’s also a major contributor to our revenue. So whatever happens to either oil price or oil output affects our revenue, affects our foreign exchange, affects our results, and affects our exchange rate. So it has implications. So if it is going up, two things. It is good for our foreign exchange earnings. We’re able to ensure that you have the right output, you know. That means that whatever we export, we are likely to get a lot more forex.
“From that point of view, you can see that it’s positive. It’s also positive in terms of the fact that it will impact our revenue positively. Because oil still remains a major source of revenue. At least currently, even with the performance of the non-oil sector, at least oil is still doing about 50 per cent of revenue. So it’s likely to impact positively on both our revenue, our foreign exchange, our foreign results, and possibly even our exchange rate. That is the positive side.
“The negative side is that it will affect energy prices. It will affect the price of petrol, the price of diesel, and the price of jet fuel. Because those prices often reflect international prices. So that means that people may have to pay more for fuel. They may have to pay more for diesel. They may have to pay more for jet fuel. I know the implication of that. For prices, for inflation, and the rest of them. So it’s a double-edged sword for us,” he said.
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