Oil jumps 4% to $79 per barrel as US-Iran tensions escalate

Global oil prices experienced a significant jump of over four percent on Monday, pushing Brent crude to around $79 per barrel. This rally is attributed to escalating hostilities between the United States and Iran, which have heightened concerns about potential disruptions to global crude supplies.

The price surge followed fresh military exchanges between the two nations and Iran's declaration that it would close the Strait of Hormuz. This vital waterway, through which approximately one-fifth of global crude supplies pass, is a critical chokepoint for oil transportation. Despite U.S. President Donald Trump's assertion that the waterway would remain open, he announced plans to reinstate a blockade on Iranian ports, intending to prevent Iranian ships and their clients from accessing or leaving ports, while allowing vessels from other nations subject to a 20 percent cargo charge.

These renewed tensions have reignited fears of supply disruptions, leading to increased volatility in the global oil market. While Brent crude remains below earlier year highs, Monday's surge marks a notable reversal from recent downward trends. This price increase occurs as Nigeria continues to bolster its crude oil production, raising the prospect of enhanced export earnings should the rally be sustained. Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) indicates Nigeria's average daily crude oil and condensate production rose to 1.74 million barrels per day in June, exceeding its OPEC quota for the second consecutive month.

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Iranian ships and their customers would be prevented from entering or leaving the ports, while vessels from other countries would be allowed access subject to a 20 per cent cargo charge.