Shell CEO: Middle East tensions threaten global energy supply, what it Means for Nigeria and Africa

The escalating conflict between Israel and Iran in the Middle East is sending ripples far beyond the region, with serious concerns emerging about its impact on global trade and energy supplies.

The CEO of Shell, one of the world’s largest oil and gas companies, on Thursday, June 19, 2025, issued a stark warning about the potential for severe disruption to oil flows from the Persian Gulf.

On the other hand, U.S. President Donald Trump hinted that the United States might enter the air war.

Wael Sawan, Shell’s chief executive, spoke at an energy conference in Tokyo about the risks posed by instability in the area.

He spoke particularly about the possibility of the vital Strait of Hormuz being blocked.

This narrow waterway is a critical passage that connects the Persian Gulf to the Indian Ocean, and about 25% of the world’s oil trade passes through it.

Any interruption here could cause significant shocks to the global energy market.

Sawan said, “If that artery is blocked, for whatever reason, it has a huge impact on global trade… We have plans in the eventuality that things deteriorate.”

This comment highlights how serious companies like Shell are preparing for worst-case scenarios amid growing uncertainty.

Oil prices have already reacted to the tensions.

Over the past week, Brent crude, an international benchmark, rose almost 1% to surpass $77 per barrel.

This increase reflects market fears about potential supply disruptions as the conflict unfolds.

Adding to the challenge is a surge in “jamming” incidents affecting navigation signals in and around the Persian Gulf.

Sawan noted that these interferences complicate safe passage for ships and increase risks for tanker operations.

The conflict’s impact on shipping costs is striking.

According to data from Clarksons Research, a respected maritime analytics firm, the daily price to charter a very large crude carrier (VLCC), a tanker capable of carrying about 2 million barrels of oil—through the Strait of Hormuz has more than doubled.

According to him, this happened in a matter of days.

Just before Israel launched its attack on Iran, the charter price stood at around $20,000 per day.

By Wednesday, that price had soared to nearly $48,000.

This spike in tanker chartering costs far exceeds the more modest 12% rise recorded in the Baltic Dirty Tanker index over the same period, an index that tracks rates for crude oil tankers worldwide.

The sudden surge indicates heightened risk and uncertainty specific to the Persian Gulf shipping routes.

Meanwhile, global financial markets are reacting with caution.

On Thursday, stock markets saw slight declines as investors sought safer assets amid growing geopolitical tensions.

Gold, traditionally viewed as a safe haven in times of crisis, ticked up slightly by 0.1% to $1,372.36 per ounce.

Similarly, the U.S. dollar strengthened against currencies like the euro, Australian, and New Zealand dollars, as traders looked for stability.

Former U.S. President Donald Trump weighed in on the situation, adding an element of unpredictability.

Speaking on Wednesday, Trump said he had not yet decided whether the U.S. would directly intervene in the conflict between Israel and Iran.

“I may do it, I may not do it.

“I mean, nobody knows what I’m going to do,” he said, leaving the door open to a potential escalation.

Financial analyst Kyle Rodda from Capital.com described the market’s mood as “edgy and uncertain.”

He noted that speculation about U.S. involvement, possibly fueled by strategic messaging from the Trump administration, is keeping investors on edge.

Should the U.S. join the air war, it would represent a major escalation and could provoke direct retaliation from Iran.

Rodda warned, “Such a scenario would raise the risk of a greater regional conflict, with implications for global energy supply and probably economic growth.”

The threat of a wider war in this strategically vital region is prompting concern not just among governments but also in the business world, which depends heavily on steady energy supplies.

In short, the Middle East conflict is no longer just a local or regional issue, it is a global one, with serious consequences for oil prices, trade routes, and international markets.

With the Strait of Hormuz at the center of these tensions, the world watches nervously as diplomatic and military developments unfold.

Impact of Middle East conflict on Nigeria and African countries

The escalating tensions between Israel and Iran, and the resulting threats to global oil supply routes like the Strait of Hormuz, have important implications for Nigeria and other African nations, especially those heavily reliant on oil exports and imports.

1. Oil Price Volatility and Economic Strain

Nigeria is Africa’s largest oil producer and exporter, and much of its government revenue depends on oil sales.

Rising global oil prices, triggered by fears of supply disruptions in the Middle East, can be a double-edged sword for Nigeria.

On one hand, higher prices could boost Nigeria’s oil revenues, providing more funds for its budget and development projects.

On the other hand, extreme volatility creates uncertainty, making it difficult for the government and businesses to plan effectively.

For oil-importing African countries, like South Africa and Kenya, soaring oil prices mean higher costs for fuel, transportation, and goods.

This can lead to inflation, reducing purchasing power and increasing the cost of living for ordinary citizens.

2. Supply Chain Disruptions

Many African countries depend on imports of refined petroleum products and other goods shipped via global trade routes passing near the Middle East.

Any disruption or blockage in the Strait of Hormuz could delay shipments, increase shipping costs, and create shortages of essential fuels and goods.

For Nigeria, while it produces crude oil, it imports most of its refined petroleum products.

Supply chain interruptions could lead to fuel shortages, worsening existing problems of inflation and transportation costs.

3. Increased Shipping and Logistics Costs

As the cost to charter oil tankers through the Persian Gulf doubles, global shipping costs are rising.

African countries that rely on maritime trade could face higher freight charges, raising prices of imported goods and impacting exports.

For Nigeria’s export-driven sectors, higher shipping costs may reduce competitiveness in international markets.

This could slow economic growth and affect foreign exchange earnings.

4. Political and Security Concerns

The Middle East conflict could increase geopolitical instability, which might ripple out to global markets and regional alliances.

African countries, particularly those with close ties to global powers or Middle Eastern countries, may face diplomatic pressures or security challenges.

These include threats to shipping lanes along the Gulf of Aden and the Red Sea.

5. Opportunity for Energy Sector Growth

The conflict could also spur African countries to accelerate their own energy development projects to reduce dependence on unstable regions.

Nigeria, Angola, and other oil producers may attract new investments as buyers look to diversify supply sources outside the Middle East.

Similarly, African nations rich in natural resources might seek stronger partnerships to expand refining capacity and infrastructure, aiming to capture more value locally and reduce reliance on imports.

Summary

In essence, the Middle East conflict threatens to increase energy prices and disrupt global trade routes, which could create economic challenges for African nations.

For Nigeria, this means navigating a complex balance between benefiting from higher oil revenues and managing inflation, supply disruptions, and rising costs.

Other African countries will face pressure on their economies through higher fuel prices and increased shipping expenses, highlighting the interconnectedness of global conflicts and local livelihoods.

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