Pecohub Nigeria could earn an extra $1.3 billion in crude sales in March as spiralling Middle East tensions threaten to trigger a supply shock that may see prices rally to $100 to $150 per barrel amid widespread fears of a possible disruption of the Strait of Hormuz.
The fiscal gain, however, may cause a significant short-term shock to household income, with fear that pump prices of petroleum products, especially premium motor spirit (PMS), may rally to N1,200 per litre.
This comes as stakeholders also insist that a protracted conflict could rattle global trade, stoke recession for many economies, and cause significant financial strains on struggling households, especially in economies where social support is weak.
The heightened tension may trigger dumping of risky assets and capital flight from emerging markets as investors prioritise safety over return. There are fears that the stock market, which has had a significant bull run since the beginning of the year, could see significant profit-taking in the coming weeks and the exit of foreigners.
Following the invasion of Iran by Israel and the United States, the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei and escalating attacks across Middle East, especially United Arab Emirates (UAE), Saudi Arabia, Qatar and Bahrain, global shipping routes, particularly in the Persian Gulf have already faced disruption with over 150 oil tankers already stranded outside the Strait of Hormuz.
The crisis is causing a ripple effect across the globe. In Nigeria, members of the Islamic Movement in Nigeria (IMN) yesterday staged protests in some northern states over Khamenei’s death, a development which stakeholders insisted has far-reaching security implications and a spiralling humanitarian crisis for a stressed and lean United Nations (UN).
Shipping sources had confirmed to Sky News that at least 150 oil tankers were waiting outside the Strait amid mounting security concerns, while several international carriers have suspended or rerouted vessels.
France’s CMA CGM, the world’s third-largest container shipping line, has reportedly instructed vessels in the Gulf to take shelter and halt certain routes.
As development escalates, the sources said some vessels are diverting around the Cape of Good Hope, increasing journey times, freight charges and war-risk insurance premiums.
