Oil prices surge beyond Nigeria’s budget benchmark as Israel strikes Iran

Crude oil prices soared on Friday following a major Israeli airstrike on Iranian military and nuclear installations, intensifying fears of a broader Middle East conflict and potential disruptions to global oil supply chains.

Brent crude futures for July delivery surged over 9%, climbing to $75.15 per barrel — the highest level recorded since early February. U.S. benchmark West Texas Intermediate (WTI) crude also rallied, reaching $74 per barrel, marking a 10% intraday gain.

The price leap is significant for Nigeria, where the federal budget sets its oil benchmark at $75 per barrel. With global prices now above that threshold, there is renewed optimism for improved fiscal revenue and a potentially more stable outlook for the naira.

According to media reports, Israel carried out a large-scale preemptive aerial assault on Iranian territory in the early hours of Friday, targeting numerous military and nuclear-related sites.

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“Iran’s expectation of a retroactive strike is not out of the question. We can expect a retaliation drone assault on Israel and its territories,” said Defence Minister Israel Katz in an announcement about the strike.

The Israel Defense Forces (IDF) launched a first wave of air raids targeting critical Iranian infrastructure. Authorities have since activated nationwide alarm systems in Israel amid fears of retaliatory missile attacks. The operation is ongoing as the IDF continues its campaign across Iranian positions.

Prime Minister Benjamin Netanyahu warned of Iran’s growing missile capabilities, stating that Tehran is developing “tens of thousands” of ballistic missiles. He cautioned that even without nuclear payloads, such weapons could cause mass casualties in Israel.

U.S. diplomatic efforts had been set to resume with Iran in Oman on Sunday to discuss Tehran’s nuclear ambitions. However, former President Donald Trump expressed doubt about the success of any forthcoming agreement, saying he was “less optimistic” about a breakthrough.

“The operation will continue for as many days as it takes to remove this threat,” said Israeli Prime Minister Benjamin Netanyahu.

Iranian state media confirmed the death of Hossein Salami, a top commander of the Islamic Revolutionary Guard Corps (IRGC). According to Israeli military sources, multiple high-ranking Iranian generals and nuclear scientists were killed during the strikes.

In a retaliatory tone, an Iranian official said, “The response to the Israeli attack will be harsh and decisive,” adding that the timing and scale of Iran’s countermeasures are currently under high-level deliberation.

Further boosting crude markets, recent U.S. economic data has added to investor optimism. Solid employment numbers and subdued producer price inflation for May have fueled expectations of potential interest rate cuts by the Federal Reserve later this year. Meanwhile, continuing jobless claims rose to levels not seen since late 2021, suggesting some softening in the labour market.