Bonny Light and other Nigerian crude grades rose slightly as trading closed.
However, markets remained cautious as Iran and the United States escalated tensions.
Bonny Light Edges Higher Amid Volatility
Traders focused on peace talks and developments around the Strait of Hormuz.
This key waterway carries a fifth of global oil and gas flows.
Bonny Light is Nigeria’s main benchmark crude oil grade.
Nigeria also produces Qua Iboe, Forcados, Escravos, and Brass River.
These grades are light and sweet with low sulphur content below 0.5%.
Therefore, refiners process them more easily into petrol and diesel.
Strait of Hormuz Tensions Disrupt Supply Flows
Since late February, conflict has disrupted shipping through the Strait of Hormuz.
Consequently, this has created a major global oil supply shock.
The United States launched “Project Freedom” to support shipping through the strait.
However, authorities later paused the initiative as tensions increased.
In addition, US forces increased pressure on Iran’s ports from April.
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Reports say strikes hit Iranian tankers near the Gulf of Oman.
The US also intercepted Iranian attacks on warships in the strait.
Furthermore, US forces struck Qeshm port and Bandar Abbas in retaliation.
Iran continues reviewing a 14-point peace proposal. Meanwhile, US officials insist the ceasefire still holds.
Nigeria Faces Fuel Inflation And Supply Gaps
Meanwhile, Nigeria faces rising domestic fuel prices linked to global trends.
Marketers adjust pump prices as they expect further increases.
Dangote Refinery also changes petrol prices due to market pressures.
These include crude costs, forex volatility, and distribution issues.
Nigeria produced 1.71 million barrels per day at a five-year high.
However, domestic supply still falls short of refinery demand.
Therefore, Dangote Refinery will import about 71% of its crude in May.
State refineries remain largely inactive since 2020.
Rising crude prices may also increase fertiliser and food inflation risks.
Overall, markets expect crude could approach 90 dollars per barrel.