Oil could surpass $90 as Middle East tensions mount, Goldman, Barclays warn

Rising geopolitical tensions in the Middle East could drive Brent crude oil prices up by as much as $10 per barrel from current levels in the mid-$70s, according to a new estimate by Goldman Sachs.

The investment bank, however, warned that in the event of a disruption to Iranian oil exports, prices could soar past $90 per barrel.

Barclays also issued its warning, saying Brent could exceed $100 per barrel if conflict in the Middle East intensifies. The bank added that prices could climb to $85 even if only half of Iran’s daily crude exports, currently over 2 million barrels, mostly to China, are disrupted.

Earlier in April, the bank cut its oil price forecasts for 2026, just days after lowering its outlook in response to the US tariff announcement, citing heightened recession risks and higher-than-expected production from the Organisation of the Petroleum Exporting Countries (OPEC).

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It reduced its 2026 forecast by $4 per barrel, projecting Brent crude at $58 and the US benchmark, West Texas Intermediate (WTI), at $55.

However, Goldman Sachs analysts have since flagged the growing vulnerability of global oil supply chains, pointing to Houthi attacks on vessels in the Bab el-Mandeb Strait as a key example of the region’s fragile export infrastructure, one of the factors behind the recent upward revision of its oil price outlook.

Despite these risks, Goldman maintained its base-case projection, with Brent averaging $60 per barrel in the final quarter of the year, provided there are no significant disruptions.

However, this outlook is growing less likely amid escalating remarks from US President Donald Trump, who recently hinted at a possible joint military strike with Israel against Iran.

Oil prices have dipped slightly as markets await a clearer picture of the US response.

As of press time, Brent crude was trading at $77.60 per barrel, while West Texas Intermediate stood at $76.35 per barrel.

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Implications for Nigeria

A potential surge in global oil prices beyond $90 per barrel offers Nigeria a short-term fiscal advantage, particularly as Brent crude currently trades above the country’s 2025 budget benchmark of $75 per barrel.

This could translate into increased oil revenue, improved dollar inflows, and a boost in foreign reserves, provided the country can meet or exceed its production targets.

However, recent figures from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) show that production remains below its Organisation of Petroleum Exporting Countries (OPEC) quota..

In May, Nigeria produced 1.45 million barrels per day (bpd), about 97 percent of its 1.5 million bpd quota set by OPEC.

The shortfall, driven by persistent issues such as oil theft, pipeline vandalism, and underinvestment in infrastructure, could limit Nigeria’s ability to fully benefit from the rising prices.

Worsening this is the country’s heavy reliance on fuel imports due to the lack of functional refineries.

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Despite being Africa’s largest oil producer, according to OPEC’s June Monthly Oil Market Report, Nigeria continues to import over 90 percent of its refined petroleum products, exposing it to elevated landing costs and inflationary pressure when crude prices rise.

Recent data from the Foreign Trade in Goods Statistics revealed that crude oil was the third largest import for the first quarter of 2025, valued at N1.19 trillion.

In the medium to long term, Nigeria risks being left behind if it continues to miss production targets while other oil-producing countries ramp up output to benefit from the global price increase.