…$80 oil not a new normal, it is temporary, Prof. Iledare cautions Nigeria against spending illusions
Oredola Adeola
Brent crude rose from $73 per barrel on Friday to $79.49 on Sunday, before easing to $78.19 in the early hours of Monday, March 2, 2026, while WTI climbed from $67.29 on Friday to $74.77 on Sunday, retreating to $71.84 in early Monday trading.
Recall that the prices movement in Brent crude is particularly significant, as Nigeria’s flagship Bonny Light crude is priced in reference to the Brent benchmark.
These near-10% weekend gains reflect heightened volatility driven by a temporary geopolitical risk premium, as escalating tensions involving Israel, the United States, and Iran intensified concerns over potential supply disruptions, particularly around the Strait of Hormuz, a strategic passage that accounts for roughly 20% of global oil supply.
In percentage terms, Brent recorded an 8.9% increase from Friday to Sunday, followed by a modest pullback attributed to early profit-taking. WTI showed a sharper reaction, rising 11.1% over the same period before correcting, underscoring its typically higher sensitivity to short-term risk sentiment.
While WTI briefly traded above the 10% threshold, Brent approached but did not fully reach that level, reinforcing the view that the rally was risk-premium-driven rather than a structural re-rating of oil prices.
Analysts caution that the price spike should be interpreted as short-term geopolitical repricing, not a fundamental shift in global oil demand or the broader 2026 market balance.
Prior to the latest escalation, many global oil market surveys projected Brent averaging $63–$65 per barrel in 2026, with WTI near $60, reflecting expectations of adequate supply, moderate demand growth, and lingering surplus risks.
The escalation of the Iran conflict, alongside reports surrounding the death of Ayatollah Ali Khamenei, has reinforced instability in a region that remains central to global energy security, prompting renewed caution among policymakers and market participants.
Energy analysts warn that oil-producing countries such as Nigeria should exercise restraint and avoid treating elevated prices as a new structural normal, noting that geopolitical premiums tend to fade once market fundamentals reassert themselves.
Energy economist Wumi Iledare, Chair of the Oil, Gas and Energy Policy Forum and Executive Director of the Emmanuel Egbogah Foundation, cautioned the Nigerian government against interpreting the current price spike as the onset of another historic oil shock.
According to him, the present situation does not compare with the 1973 oil embargo, the Iran-Iraq war, or the Gulf War era, noting that today’s global oil market is structurally more diversified, more transparent, and more responsive.
He explained that modern markets operate on rational expectations, with traders assessing real-time data such as spare capacity, alternative supply sources, demand conditions, and the likelihood of sustained disruption.
As a result, he said, price spikes driven by geopolitical tensions tend to fade unless there is a prolonged and material loss of physical supply.
Iledare stressed that OPEC does not set oil prices, which are determined by global market dynamics, adding that while geopolitical tensions may introduce a temporary premium, that premium dissipates when fundamentals remain stable.
“For Nigeria, this is where caution is essential,” he warned, noting that if crude prices move toward $80 per barrel, such levels should not be treated as a new normal.
He described oil prices as historically volatile and mean-reverting, cautioning that sharp rises can be followed by equally rapid declines.
He further advised that any revenue above the budget benchmark should be used to strengthen fiscal buffers, emphasizing that windfalls from price spikes are temporary and that corrections are inevitable.
According to him, the current market environment is not a time for exuberance, but rather one that calls for disciplined economic management.
