Brent crude climbs above $110 as Middle East attacks rattle oil supplies

Brent crude, the oil price Nigeria's budget is built around, climbed above $110 a barrel on Wednesday as attacks on ships and threats to energy facilities in the Middle East raised fears about global supplies.

Brent was trading at $110.40 per barrel around 10 a.m. West Africa Time, up 1.5 percent, according to market data reported by Reuters. The US benchmark, West Texas Intermediate, also rose 1.5 percent to $99.27 per barrel.

The jump follows a volatile Tuesday, when prices pulled back from earlier highs as traders weighed diplomatic efforts against the risk that oil shipments could be disrupted.

Why it matters in Nigeria

Nigeria earns most of its foreign exchange from crude oil, so a sustained price rally could mean more money for government coffers, provided the country's production holds up. That is the good side.

The worry is fuel. Higher crude prices do not automatically push up petrol prices at Nigerian pumps, but a lasting rally that also lifts refined product prices could raise supply costs and depot prices here. The final effect will depend on the naira-dollar exchange rate, how much petrol local refineries produce and the cost of restocking.

Sources said the market is watching several flashpoints. Iran's Revolutionary Guards Navy said a supertanker caught fire after hitting a sea mine south of the Strait of Hormuz on Tuesday, a key route for global oil trade. Shipping intelligence firm Kpler reported at least 18 vessel attacks over two weeks, with threats spreading into the Gulf of Oman.

Yemen's Houthi movement has claimed responsibility for attacks on Saudi Aramco facilities, including sites in Yanbu and the Shaybah oilfield, according to the reports. Any lasting damage to Saudi production or export routes would tighten supplies further.

Prices also found support from US inventory data. The American Petroleum Institute reported that US crude stockpiles fell by 4.9 million barrels in the week ended October 16, a sign of tighter supply. Traders are also watching uncertainty over Russian diesel supplies.

What happens next

Diplomatic efforts involving Iran, Qatar and Pakistan have yet to produce a clear easing of tensions, so traders are expected to keep a close eye on the Strait of Hormuz, the Red Sea and Saudi energy sites. Fresh US inventory figures and any sign of de-escalation could cool prices; more attacks could push them higher.

For Nigerian households, the practical question is whether the rally lasts long enough to reach the pump. For now, the market is moving, but the effect on petrol prices is not automatic.