Global oil prices surged to their highest level in nearly three years as tensions in the Middle East escalated, triggering fears of supply chain disruptions and fueling concerns about rising energy costs worldwide. Brent crude climbed 6.24 percent to $114.08 per barrel on Thursday, marking its first time above $114 since May 2022, while West Texas Intermediate crude rose 0.97 percent to $96.33 per barrel. The sharp increase comes amid a dangerous escalation in hostilities between Iran and Israel, which has drawn in global powers and raised alarms about the stability of the world’s energy markets.

Iranian Missile Strikes Target Critical Energy Infrastructure

Iran reportedly launched missile strikes targeting energy facilities in Qatar and Saudi Arabia in retaliation for Israel’s earlier attack on Iran’s key gas infrastructure at the South Pars gas field. QatarEnergy, the state-owned energy giant, confirmed that missile strikes hit Ras Laffan, home to its core liquefied natural gas processing facilities, causing extensive damage and raising concerns about the potential for a broader disruption to global energy supply chains.

Saudi authorities disclosed that air defense systems intercepted four ballistic missiles aimed at Riyadh and successfully thwarted a drone attack targeting a gas facility, preventing further damage to its energy infrastructure. The South Pars field, shared between Iran and Qatar, is the largest natural gas reserve in the world, and any disruption to its operations is a major concern for global energy markets.

Ripple Effects Across Global Markets

The escalation of hostilities has already begun to ripple through global markets, with Nigeria among the countries feeling the impact. In Nigeria, rising global crude prices are translating into higher domestic fuel costs. The Dangote Refinery, Africa’s largest oil refinery, recently acknowledged its exposure to global price benchmarks, noting that international developments directly influence its pricing structure.

In March, the refinery raised its ex-gantry petrol price to ₦1,175 per litre, reflecting the pressure from rising crude costs. The increase comes at a time when Nigeria’s oil production is under strain. According to the Organization of the Petroleum Exporting Countries, the country’s crude production dropped to 1.31 million barrels per day in February, adding another layer of concern for Africa’s largest oil producer.

Geopolitical Tensions Add Pressure to Energy Markets

With geopolitical risks intensifying and supply routes under threat, analysts warn that oil prices could remain volatile in the coming weeks. The United States has also weighed in, with former President Donald Trump warning that the country could take direct action against Iranian energy assets if attacks on regional facilities persist. This development has only heightened fears of further instability in the region.

Analysts say the current situation is reminiscent of past periods of geopolitical tension, such as the 2019 attacks on Saudi oil facilities, which triggered a similar spike in oil prices. However, the current conflict involves a broader set of players and has the potential to affect more regions than previous episodes.

The situation highlights the fragile state of global energy markets, which are already under pressure from supply chain disruptions, inflation, and a transition toward renewable energy. Energy-importing nations, particularly those in Asia and Africa, are bracing for further price increases, which could exacerbate inflation and economic instability.

According to the International Energy Agency, global oil demand is expected to rise in the coming months, further straining an already tight supply situation. The agency has warned that any prolonged disruption in the Middle East could lead to a significant increase in energy prices, with far-reaching consequences for global economies.

While the immediate focus remains on the Middle East, the ripple effects of the current conflict are being felt in energy markets around the world. The situation highlights the interconnectedness of global energy systems and the vulnerability of economies that rely heavily on imported oil.

With no immediate resolution to the conflict in sight, analysts say the coming weeks will be critical in determining the trajectory of oil prices and the broader economic impact. The situation remains fluid, with further developments likely to shape the energy landscape in the months ahead.