Market News

*Israel, Iran conflict escalates 

*JP Morgan sees $130/barrel in worst-case scenario

BY  Emmanuel Addeh in Abuja

Oil price yesterday experienced its fastest one-day jump in three years, with Brent Crude, Nigeria’s benchmark, peaking intra-day near $78.50/barrel or about 14 per cent, while West Texas Intermediate (WTI), US benchmark, surged to around $77/barrel.

However, the situation is a two-edged sword for Nigeria. While Brent crude rose temporarily above Nigeria’s $75/barrel budget benchmark for 2025, relieving immediate fiscal pressure, before closing at $74.68/barrel yesterday, global price hikes are expected to drive higher fuel prices at the pumps. Besides, the Nigerian government faces a tough balance as a jump in oil revenue could improve foreign exchange inflows, but volatile prices stoke naira instability if FX management remains weak.

The increase in oil price came after Israel carried out airstrikes against Iran and the Middle Eastern country retaliated, raising fears of a wider war in a region that accounts for a third of global crude production.

Yesterday’s attack marked the most dramatic escalation yet in a conflict that has loomed in the background of the oil market for about 20 months, but had yet to result in a significant loss of barrels at the time of putting this report together.

However, a broader regional clash in the Middle East threatens a major rerouting of global oil flows by restricting supplies through the Strait of Hormuz in addition to the possible reduction of Iranian exports. About a fifth of the world’s total oil consumption passes through the strait, or some 18 to 19 million barrels per day of oil, condensate and fuel.

Israel’s overnight airstrikes on Iran also drove up shipping rates, with forward freight agreements for July bets on the future cost of moving Middle East crude to Asia jumping 15 per cent to $12.83 a metric ton, according to data from brokerage Marex Group Plc.

Israel said it had targeted Iran’s nuclear facilities, ballistic missile factories and military commanders at the start of what it warned would be a prolonged operation to prevent Tehran from building an atomic weapon.

Iran has already responded with drone strikes, escalating fears of broader conflict and impacting oil market forecasts. While tensions are high, many analysts believe a full-scale war is unlikely, especially as the US signals a preference for de-escalation and diplomacy.

Central Tel Aviv in Israel was impacted by ballistic missiles fired from Iran, it was learnt, after Israel said it had detected dozens of missiles launched from Iran and was working to intercept them.

 Israeli paramedics said they were treating five injured people and Israeli officials urged people to take shelter. Israeli Defence Minister, Israel Katz, said Iran had “crossed a red line” by firing missiles at populated civilian areas in Israel.

Supreme Leader,  Ayatollah Ali Khamenei, earlier said Israel “should expect severe punishment” for Israel’s wide-ranging attack on the country’s nuclear programme and military leadership.

In waves of strikes that began early yesterday and continued through the day, Israel killed the head of the Islamic Revolutionary Guard Corps and struck dozens of targets.

The Commander of the Islamic Revolutionary Guard Corps, Hossein Salami, and two other generals were killed, punching a hole in Tehran’s military leadership. But the National Iranian Oil Refining and Distribution Company said oil refining and storage facilities had not been damaged and continued to operate. The International Atomic Energy Agency (IAEA) has also formally declared Iran in breach of nuclear non-proliferation obligations, a first in 20 years, after uncovering undeclared nuclear activity at multiple sites.

Meanwhile, JP Morgan is sticking to its base-case oil price forecast for 2025, projecting Brent crude will trade in the low-to-mid $60s, despite a sharp escalation in geopolitical tensions involving Iran, the US, and potentially Israel.

In a note, the bank said it sees oil averaging $60 in 2026, but flagged $120–$130 per barrel as a potential range in the event of worst-case outcomes—namely, military conflict and a closure of the Strait of Hormuz, through which one-fifth of global oil flows.

JP Morgan noted that while such escalations could lead to meaningful supply disruption, particularly if Iran’s 2.1 million bpd of exports are cut off, its base case still assumes diplomacy holds.