Crude oil prices surged over 8% on Wednesday, reaching $80.05 per barrel for Brent futures, after former U.S. President Donald Trump announced the end of the Memorandum of Understanding with Iran aimed at ending the Gulf conflict. U.S. West Texas Intermediate crude rose 7.5% to $75.72 a barrel. The spike followed Trump's warning of additional U.S. strikes after Iranian attacks on three commercial vessels in the Strait of Hormuz, with Iran retaliating by targeting U.S. military sites in Bahrain and Kuwait. The renewed hostilities disrupted tanker traffic, with at least four oil and gas vessels turning back from the Strait, a critical corridor for about one-fifth of global energy supply.
Trump stated the ceasefire agreement, brokered by Pakistan last month, was "over" and suggested the U.S. might take control of Kharg Island, Iran's main oil export terminal located 16 miles off its coast. Seizing the island could significantly disrupt Iran's crude exports, which rely on the facility for 90% of shipments. The conflict reversal reversed earlier market trends, as oil prices had dropped to around $70 after the initial truce and traders had built large short positions betting on further declines.
Separately, Dangote Industries plans to build a 700,000-barrel-per-day refinery in Kenya, its largest refining project outside Nigeria, on Lamu Island. The project, estimated to cost around $17 billion, will be financed through internal cash, bonds, and a planned initial public offering. Edwin Devakumar, Dangote's vice president for oil and gas, confirmed site selection, soil testing, and design work are underway, calling Kenya the original choice. The refinery aims to reduce East Africa's reliance on imported fuels and expand Dangote's refining footprint following the 2024 launch of its $20 billion, 650,000-barrel-per-day Lagos facility.
The International Monetary Fund maintained Nigeria's growth forecast at 4.1% for 2026 and 4.3% for 2027, citing stable macroeconomic conditions and favourable trade terms as an oil exporter, though warned higher food prices could worsen poverty.
Trump's abrupt end to the Iran ceasefire deal, after previously backing it, undercuts his claim of pursuing diplomatic stability in the Gulf. The renewed conflict directly benefits oil producers like Nigeria in the short term through higher prices, but increases global market volatility. Dangote's planned $17 billion refinery in Kenya signals ambitious African expansion, though reliance on an IPO in uncertain markets poses financial risk. The IMF's unchanged growth forecast suggests confidence in Nigeria's economic resilience despite external shocks.
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