Nigerian Oil and other major oil contracts moved higher after an attack on Saudi Arabia’s closure of a key crude oil pipeline hit the market, disrupting a crucial route for avoiding the Strait of Hormuz during the US-Iran war.
Brent gained as high as 3.7% to more than USD 108 a barrel just before it pared gains to strike above $108 a barrel, given that Saudi Arabia disclosed on Friday evening that it had shut its East-West pipeline as a preemptive first response to attacks on that day.
Bonny Light traded above $115 per barrel over the weekend on macro energy strength/grand-dated Brent proxies. Light, sweet Nigerian grades maintain a healthy-to-positive quality premium over heavy/sour peers amid continued European and Mediterranean refinery appetite for low-sulfur yield.
However, regional freight and prevailing prompt liquidity fluctuations impose a ceiling. Price metrics remain highly sensitive to macro geopolitical risk cues (Middle East supply concerns lift benchmark Brent into the $107/bbls territory).
On the diplomatic side, a meeting scheduled later Monday between Iran and a group of Persian Gulf states on a temporary shipping corridor through Hormuz was postponed, Omani foreign minister Badr Albusaidi said. Bahrain earlier said it was not participating in the talks, partly due to the East-West pipeline strike, and Axios reported Riyadh was hesitant about the proposal.
Oil traders considered the regional implications of a fast-moving military campaign by Iranian-backed Houthi fighters along Yemen’s Red Sea coast, which would give the group a freer hand in overseeing shipping through the Bab el-Mandeb strait.
Crude has climbed more than 75% so far this year as the US-Iran standoff spilled into other countries in the region, pulling down supplies and throwing shipping markets into chaos. On the demand side, however, recent buying by China, the world’s biggest crude importer, has also lent support to crude prices.
The Middle East emergency has hit the world economy with an inflationary blow, as the cost of crude, natural gas and petroleum derivatives such as diesel soared. Following US reports that the rate of inflation accelerated in August, the Federal Reserve is likely to raise rates this week.
Even before the assault on the East-West conduit, the oil flow from the kingdom had already been squeezed. Riyadh has already informed OPEC, the cartel that controls oil prices, that the kingdom’s crude production in May fell to the lowest since 1990
Meanwhile, Scott Bessent, the US Treasury Secretary, announced yesterday that he would unveil fresh sanctions on a top bank today in what appears to be part of an effort to see Tehran cave in. Meanwhile, the US Navy is cutting off the Islamic Republic’s ports to choke off its energy sales.
Nigerian Production Capacity strengthens in August
Nigeria total crude+ condensate (August 2026 data) according to Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and OPEC averaged around 1.68 million bpd (crude-only baseline around 1.50m – 1.57m bpd depending on condensate factor) for August, its fourth consecutive month in line with OPEC quotas/agreements, bolstered by the resolution of single-buoy-moorage (SBM) and transit congestions at facilities like the Erha field.
Bonny Terminal accounts for the highest-producing regional streams ~320k bpd, trailed by Forcados (~317k bpd), Qua Iboe (~171k bpd), Escravos (~131k bpd), and Bonga (~92.5k bpd) [Government plans drive production up to 3m bpd by 2030; however, current adjustments are driven more by normal field maintenance, Niger Delta security situation management, and incremental brownfield optimization than by exponential growth. (Nairametrics)
