Iran’s decision to reclose the Strait of Hormuz has dashed hopes for a sharp drop in fuel prices in Nigeria.
The strategic waterway, which handles about 20 percent of the world’s oil shipments, was reopened on Friday after a ceasefire agreement between Iran and the United States. However, Iran shut the strait again less than 24 hours later, citing the ongoing blockade of its ports by the US as the reason for its action. Reports indicate that Iranian gunboats fired on a merchant vessel on Saturday as it attempted to pass through, with the Iranian military announcing that the strait had returned to its previous state.
Fuel marketers in Nigeria had been optimistic that reopening the Strait would lead to a significant reduction in petrol prices, from the current N1,250 per litre to as low as N900. Joseph Obele, spokesman for the Petroleum Products Retail Outlet Owners Association of Nigeria, said on Friday that crude oil prices had dropped following the brief reopening, raising hopes that petrol prices would soon follow suit. He recalled that before the onset of the crisis on February 28, petrol sold for around N800 per litre and expressed hope that prices would revert to those levels if stability persisted.
“With the reopening of the Strait of Hormuz, Nigerians should expect a very significant reduction in petrol prices. Petrol will fall below N1,000 by next week, probably to N900 per litre. Don’t forget that the product was N800+ before the Middle East crisis. Now that the war is over, we should be expecting a return to that price regime, Obele said on Friday.
However, by Sunday, Obele told reporters that the reclosure of the strait had dashed those projections, saying the status quo would remain until Iran and the US reach a lasting ceasefire.
Meanwhile, US President Donald Trump accused Iran of violating the ceasefire by attacking ships in the Strait and reiterated threats to target Iranian energy infrastructure unless a peace deal is reached. Iran decided to fire bullets yesterday in the Strait of Hormuz—a total violation of our ceasefire agreement! Trump wrote on social media. He added, We’re offering a very fair and reasonable deal… if they don’t [accept], the United States is going to knock out every single power plant and every single bridge in Iran. No more Mr Nice Guy!
Despite these tensions, oil prices have not surged significantly. Brent crude was trading at $90 per barrel on Sunday, up from $88 before the strait’s reclosure, but still below the $95 recorded on Friday morning.
Negotiators from both sides are expected to meet in Islamabad, Pakistan, on Monday evening, with the current two-week ceasefire set to expire on Wednesday.
