Prices for global crude oil soared early Monday morning. As at 05:25 WAT on Monday, May 18, Brent crude hit $111.2 per barrel while US West Texas Intermediate (WTI) crude also increased 2.08% to trade at $107.6 per barrel.

The current spike comes after the United Arab Emirates and Saudi Arabia confirmed they were attacked by drones targeting energy infrastructure.

Why is crude oil price going up?

The recent developments have heightened worries over the Strait of Hormuz, a key global shipping route through which a large proportion of global oil exports passes.

The Strait of Hormuz is a critical chokepoint for energy flows and a vital area that has previously triggered quick oil market responses in terms of price movements when threatened.

These worries have raised expectations of higher crude oil prices, and this could soon and would likely lead marketers to raise petrol prices, reversing the price stability seen in Nigeria's downstream oil sector recently.

Nigeria's petrol market has both domestic refining and import parity in its pricing mechanism making it sensitive to the global crude oil price.

In recent weeks, there has been relative stability in depot prices in Nigeria. For example, Lagos depots such as Aiteo, Nipco, and A.A. Rano were trading around N1,208 to N1,210 per litre, while Port Harcourt depots such as Sigmund and Bulk Strategic hovered around N1,223 per litre.

Warri depots, including Matrix and other suppliers, traded around N1,234 to N1,235 per litre, while Calabar depots remained around N1,223 per litre.

The national average depot price had recently declined slightly to below N1,230 per litre from around N1,250 per litre, but current trends suggest this may quickly be reversed by rising crude oil prices.

Olatide Jeremiah, CEO of PetroleumPrice.ng said:

"Crude oil constitutes 80% of production cost of finished products in any part of the world and it dictates the petrol price by refineries and depot owners."

The current prices at depots and filling stations could change if petrol prices continue to sell above N100 per barrel.