Oil prices climb as Middle East attacks raise supply and shipping risks

Oil prices climbed on Wednesday as escalating supply risks in the Middle East kept investors on edge. Attacks on a tanker near the Strait of Hormuz and on Saudi Arabian facilities by Iran-backed Houthis unsettled the market.

Brent crude futures gained 1.22% to $110.13 a barrel. U.S. West Texas Intermediate crude rose 1.11% to $98.92 a barrel.

Hormuz mines and Saudi strikes

Iran’s Revolutionary Guards said Tuesday that naval mines had prevented three tankers attempting to pass through the Strait of Hormuz using routes Tehran deemed unauthorized. The IRGC statement was published on its official Sepah News website.

“Two violating oil tankers were set ablaze and halted due to the explosion of mines planted by the brave sailors of the IRGC Navy at an illegal crossing point in the southern part of the Strait of Hormuz,” the IRGC said.

Yemen’s Houthi militants claimed responsibility on Monday for strikes targeting Saudi Aramco facilities in Yanbu, the Shaybah oilfield and airports in Riyadh and Abha.

Freight costs surge

The tensions have sent global oil shipping costs soaring. The global average crude freight rate has surged above $20 per barrel, compared with just $3 a year earlier, according to a Goldman Sachs report published Tuesday. Rates have eased slightly in recent days but remain roughly seven times higher than a year ago.

Goldman estimated that war-risk premiums linked to crossing the Strait of Hormuz accounted for about $7 of the $20 year-on-year increase in average crude freight rates. Ship-to-ship transfers outside the Persian Gulf contributed another $4.

The investment bank warned that elevated shipping costs could widen price differences between crude grades, squeeze refiners’ profit margins and ultimately push up refined fuel prices.

“High freight costs have weighed particularly heavily on Asian refineries’ net margins, threatening their refined product output, which could then raise global refined product prices,” Goldman Sachs analysts wrote.

What it means for Nigeria

For Nigeria, higher global refined product prices matter because the country relies on imported petrol and diesel. A sustained rise in freight and refined fuel costs can add pressure to local pump prices and business costs.