Oil Prices Climb as US-Nigeria Tensions Stoke Supply Fears
Crude futures rise after Washington threatens military action against OPEC's largest African producer, introducing a new geopolitical risk to a tight market.
Crude oil prices advanced on Monday as escalating tensions between the United States and Nigeria introduced a fresh geopolitical risk premium into a market already grappling with tight supply fundamentals.
West Texas Intermediate (WTI) and Brent crude futures both ticked higher in early trading, reacting to statements from Washington over the weekend that the Pentagon was preparing for potential military action against Nigeria, a key member of the Organization of the Petroleum Exporting Countries (OPEC). The rhetoric has stoked fears of a potential supply disruption from Africa's largest oil producer.
The flashpoint ignited after the White House condemned the alleged persecution of Christians in Nigeria. U.S. President Donald Trump announced he had directed the Pentagon to draw up plans for possible intervention and threatened to halt all foreign aid. In a statement to reporters, President Trump said that deploying U.S. troops or conducting air strikes "could be" an option, adding a significant layer of uncertainty to the region's stability. The Nigerian government has pushed back, calling the threats misleading and affirming its commitment to protecting all its citizens.
Any potential instability in Nigeria is a material concern for the global energy market. The nation is a critical oil supplier, with recent production figures hovering around 1.5 million barrels per day, according to OPEC data. The Nigerian government has stated its ambition to boost output to over 2 million barrels per day in 2025, making its stability crucial for future global supply calculations. A conflict or significant unrest could quickly remove a substantial volume of high-quality crude from a market with a thin supply buffer.
The geopolitical flare-up comes at a sensitive time for oil traders, who are already contending with a finely balanced market. OPEC and its allies, known as OPEC+, recently opted for a cautious approach to production, agreeing to modest output increases for the remainder of 2025 before pausing hikes in the first quarter of 2026. This strategy reflects concerns about global demand and a desire to support prices.
Furthermore, recent inventory data has pointed to a tightening market. Weekly reports from the Energy Information Administration (EIA) and the American Petroleum Institute (API) have consistently shown draws on crude stockpiles, signaling that demand is robustly outpacing supply. In this environment, the market is highly sensitive to any new or unexpected threats to production.
While oil prices have been primarily driven by inventory levels and OPEC+ policy in recent weeks, the emergent risk in Nigeria provides a fresh catalyst for bulls. Traders are now pricing in the possibility, however remote, that a major supply source could be compromised. The developments will be closely watched, as any further escalation could have a significant and immediate impact on prices at the pump and for the global economy.