Oil prices surged over 2% after Houthi rebels attacked a second vessel in the Red Sea, with Nigerian crude blends following the broader market rally that pushed major international contracts to their highest levels in two weeks.
The resurgence in oil prices came after Iran-backed Houthi militants launched a deadly assault on shipping lanes off Yemen’s coast, killing four crew members aboard the Greek-operated, Liberian-flagged bulk carrier Eternity C.
The attack, carried out using a combination of drone strikes and speedboat operations, has reignited concerns about supply chain disruptions through one of the world’s most critical maritime corridors.
Nigerian premium crude grades capitalized on the global rally, with the country’s flagship blends—Bonny Light, Brass River, and Qua Iboe—settling at $72.3 per barrel on Tuesday. This represented a significant premium over international benchmarks, though the price remained $2.7 below the federal government’s benchmark for crude oil revenue calculations.
However, the momentum proved short-lived as oil markets retreated on Wednesday, weighed down by bearish inventory data from the United States and mounting uncertainty over potential trade policy changes. Brent crude futures for September delivery fell to $69.91 per barrel, while West Texas Intermediate (WTI) crude dropped 0.4% to $68 per barrel.
The selloff was triggered by the American Petroleum Institute’s surprising revelation that US crude oil inventories surged by 7.1 million barrels for the week ending July 4—a sharp reversal from forecasts that had predicted a draw of 2.8 million barrels. The build followed a modest 680,000-barrel increase the previous week, suggesting potential oversupply concerns in the world’s largest oil-consuming nation.
Adding to market jitters, traders remained cautious ahead of anticipated tariff announcements from President Trump’s administration, with many participants adopting a wait-and-see approach that contributed to the price decline. The policy uncertainty has created additional volatility in energy markets already grappling with geopolitical tensions in the Middle East.
The inventory data also revealed mixed signals across petroleum products, with gasoline stocks falling by 2.2 million barrels and distillate inventories declining by 800,000 barrels. Market analysts interpreted these figures as evidence of potential demand-supply imbalances that could impact pricing dynamics in the coming weeks.
Industry observers are now closely monitoring the upcoming Energy Information Administration (EIA) report, which, if it aligns with the API’s trend, would mark the largest crude oil inventory increase since January. Such a development could further pressure prices despite ongoing geopolitical tensions in the Red Sea region.
Any sustained disruption in trade there could send a ripple effect of higher costs throughout the world economy. This is particularly true of energy: 12 percent of seaborne oil and 8 percent of liquefied natural gas (LNG) transit the Suez Canal.
The Nigerian oil sector, which has struggled with production challenges and infrastructure constraints in recent years, continues to benefit from its high-quality crude blends that command premium prices in international markets. Despite the recent volatility, the country’s oil grades remain attractive to refiners due to their low sulfur content and favorable refining characteristics.
As global markets navigate between geopolitical risks and fundamental supply-demand dynamics, the trajectory of Nigerian crude prices will likely remain closely tied to developments in both the Red Sea shipping crisis and broader macroeconomic indicators from major consuming nations.
WHAT YOU SHOULD KNOW
Nigerian crude oil prices hit $72.30 per barrel following deadly Houthi attacks on Red Sea shipping that killed four crew members, but gains were quickly erased as U.S. crude inventories unexpectedly surged by 7.1 million barrels.
The market now faces conflicting pressures: geopolitical tensions threatening global supply routes versus potential oversupply concerns in the world’s largest oil market.
With 12% of seaborne oil transiting through the vulnerable Red Sea corridor, traders are closely watching whether supply disruptions or demand fundamentals will drive prices moving forward.
