Global Trade Rattled as Israel-Iran Conflict Drives Oil Prices and Inflation Surge

The renewed hostilities between Israel and Iran have ignited fresh concerns across global energy markets, with oil prices climbing to their highest levels in three years. Brent Crude surged to $78.50 per barrel and WTI followed closely, triggering alarms over potential disruptions to energy supply chains, maritime logistics, and inflation worldwide. With much of the global oil supply flowing through this volatile region, investors are growing increasingly jittery about the implications of prolonged instability.

In Nigeria, the crisis presents both a challenge and an opportunity. Dr. Muda Yusuf, Director General of the Centre for the Promotion of Public Enterprise, stressed the need for Nigeria to increase oil production to take advantage of the elevated prices, which could boost foreign exchange earnings and fiscal revenues. However, he warned that the spike in global energy prices would likely increase the cost of petrol, diesel, and transportation, thereby fueling inflation and eroding business profits.

Dr. Paul Alaje, Chief Economist at SPM Professionals, urged national unity and strategic governance to weather the economic impact. He highlighted the importance of peace and cohesion in safeguarding Nigeria’s fragile economy, which is already under strain from high petrol import costs and inflationary pressures. His call for emotional and political maturity comes as Nigeria’s petrol import bill hit N1.76 trillion in the first quarter of 2025.

The international trade impact is also widening. Attacks on cargo ships in key Middle Eastern maritime routes like the Red Sea and Suez Canal are forcing rerouting through longer, costlier passages around Africa. This not only increases travel time and insurance premiums but also reduces shipping capacity globally. With oil being a core input in everything from transportation to manufacturing, even small price hikes could ripple across economies, with the IMF warning of inflationary spikes tied directly to energy costs.

Perhaps the most alarming risk lies in the possibility of Iran blocking the Strait of Hormuz, a chokepoint for nearly 25% of the world’s oil supply. While analysts caution this would provoke global backlash—including from allies like China and regional oil exporters—any serious disruption could push oil prices beyond $100 per barrel. As tensions escalate, the world is once again reminded that disturbances in the Middle East seldom remain regional—they shake the very foundations of global trade and economic stability.

Source: The Sun