Brent crude, the international benchmark for oil prices, rose as high as about $108.20 a barrel during trading on September 28 before giving back some of those gains.

It eventually settled at $105.28 a barrel, up 96 cents for the day. US crude settled at $92.60.

The sharp early increase followed US President Donald Trump’s rejection of an Iranian proposal that could have helped reopen the Strait of Hormuz more fully to commercial shipping.

The possibility of renewed talks involving regional mediators later in the day helped oil prices ease from their highs.

Why the Strait of Hormuz keeps affecting oil prices

The Strait of Hormuz is one of the world’s most important shipping routes for oil and natural gas.

Large volumes of energy exports from Saudi Arabia, the United Arab Emirates, Qatar and other Gulf producers normally pass through the narrow waterway before reaching markets in Asia, Europe and elsewhere.

The conflict has disrupted that normal flow.

Middle Eastern crude exports improved in September as Saudi Arabia and the UAE found ways to increase shipments, but they remained about 3.2 million barrels a day below February’s pre-conflict level, according to shipping data cited by Reuters.

That means traders are still paying close attention to every development involving Hormuz.

A sign that the route could become more difficult to use tends to push prices higher. News suggesting negotiations or better shipping conditions can quickly pull them back down.

Higher oil is also affecting interest-rate expectations

The oil story is no longer only about energy.

Higher fuel and transport costs can eventually make many other things more expensive, adding pressure to inflation.

That has become important in the United States because the Federal Reserve has already started raising interest rates again after inflation remained above its target.

Federal Reserve Governor Lisa Cook said on Monday that rising oil prices were among the factors creating further inflationary pressure, while financial markets increasingly expected another US rate increase before the end of the year.

US government bond yields also rose sharply on Monday.

The 10-year Treasury yield reached levels not seen since 2007, while the 30-year yield touched its highest point since 2004. US stocks fell, with the S&P 500, Nasdaq and Dow Jones all closing lower.

The connection is straightforward: if investors believe inflation will remain high, they expect interest rates to stay higher for longer. That makes borrowing more expensive for governments, companies and households.

What this means for Nigeria

Nigeria is an oil exporter, so higher international crude prices can increase the value of the country’s oil exports and potentially improve government and foreign-exchange earnings.

But higher oil prices are not automatically good news for Nigerians.

Nigeria may produce crude oil, but its economy is still affected by international fuel prices, shipping costs, exchange rates and the cost of imported goods.

Businesses that depend on transportation, imported raw materials or foreign equipment can face higher costs when global energy prices rise. Those costs can eventually reach consumers.

There is also a financial-market effect.

Higher US interest rates can make dollar investments more attractive, which can put pressure on currencies and investment flows in emerging economies, including Nigeria.

So Nigeria can gain from selling crude at a higher price while also dealing with some of the inflation and financial pressure that expensive oil creates globally.

What happens next

The biggest immediate factor remains the Middle East.

US and Iranian officials are still communicating indirectly through mediators, but no agreement has been reached to end the conflict or fully restore normal shipping through Hormuz.

Oil prices had already fallen back to around $103 a barrel on Tuesday as more Middle Eastern crude reached the market, showing how quickly prices can move when supply conditions change.

For Nigeria, the figures worth watching are not simply whether Brent crosses $100 or $110.

What matters is how long prices remain elevated, whether Nigeria can maintain its own oil production, and whether additional export earnings are large enough to outweigh the wider costs of more expensive energy.

Source: Reuters global markets and energy reporting.