Bonny Light Nears $95 as Hormuz Crisis Keeps Oil Markets on Edge

Nigeria’s Bonny Light crude is closing in on $95 a barrel, as renewed tensions around the Strait of Hormuz keep traders wary of further disruption to global oil supplies.

The Nigerian crude benchmark has been moving through a volatile market, with prices recently swinging from the low $80s into the mid-$90s. Bonny Light’s latest rise reflects the wider anxiety surrounding the Middle East, particularly the uncertainty over when—and under what conditions, commercial shipping will return to normal through Hormuz.

The situation around the strategic waterway has become increasingly tense. Reuters reported that shipping traffic through the Strait of Hormuz had fallen close to a standstill by Friday after two more vessels were attacked, with only a handful of ships recorded passing through compared with more than 130 vessels a day before the war. No crude oil shipments were visible in Friday’s tracking data.

That matters enormously for the oil market because Hormuz is one of the world's most important energy corridors. Before the conflict, roughly one-fifth of global oil and liquefied natural gas flows passed through the strait. With traffic now severely restricted, traders are effectively pricing the possibility that a geopolitical confrontation could become a prolonged supply problem.

The uncertainty has been compounded by the lack of a clear diplomatic breakthrough between Washington and Tehran. Iran has said the waterway will not fully reopen unless the United States changes its position and accepts Tehran's conditions, while Washington has maintained pressure on Iran and said its naval presence can continue for as long as necessary.

The result is a market caught between two competing forces. On one side is the threat of a major supply disruption, which pushes crude prices higher. On the other is concern about weakening global demand, particularly in China, which could limit how far prices can rise. Nigerian crude prices are therefore benefiting from the geopolitical premium, but the market is not moving in one direction without resistance.

For Nigeria, the climb in Bonny Light prices offers an obvious potential benefit.

Higher crude prices can increase export earnings and government revenue, especially if the country can maintain production. Recent Nigerian output, however, has not been completely immune to operational problems. Production averaged between 1.505 million and 1.546 million barrels per day in the previous month, according to Nairametrics, with technical and operational issues affecting output from major offshore fields including Erha and Akpo.

That creates an important distinction for Nigeria: a higher oil price is valuable, but only if the country has enough barrels to sell.

The situation also puts renewed attention on Nigeria’s position as a producer of light, sweet crude. Bonny Light, Forcados and Escravos remain attractive to refiners because of their relatively low sulphur content, while Nigerian grades continue to compete with growing supplies of similar crude from the Americas.

There is another reason Nigerian oil traders will be watching Hormuz closely. If the disruption persists, the effect may not be limited to crude prices. Shipping costs, insurance premiums, refined-product prices and the availability of fuel could all come under additional pressure as refiners and traders adjust to a dramatically altered global supply network.

That is already visible in other parts of the energy market. European gas prices have also risen sharply amid the continuing uncertainty, while oil markets have remained sensitive to every development between Washington and Tehran.

Yet the market is not assuming that prices will continue rising indefinitely.

A sustainable reopening of Hormuz could quickly remove some of the geopolitical premium from crude. Reuters reported earlier this week that Brent settled at $88.91 a barrel, while analysts described the market as potentially remaining within a broad range as traders wait to see whether the US-Iran confrontation eases or intensifies.

For Nigeria, that makes the current price environment both an opportunity and a warning.

The opportunity is clear: stronger crude prices can provide additional foreign exchange and government revenue at a time when the country is working to strengthen its fiscal position. The warning is equally important, Nigeria cannot control the geopolitical forces pushing oil higher, and a sudden resolution in Hormuz could send prices lower just as quickly.

For now, the market remains focused on the strait.

Bonny Light is approaching $95, but the bigger question for Nigeria is whether the geopolitical premium lasts long enough, and whether Nigerian production can rise enough, to turn higher oil prices into a lasting economic gain.