Global oil prices fell sharply on Monday after the United States and Iran paused military attacks over the weekend, boosting expectations that diplomatic efforts could ease tensions and allow shipping activity to gradually resume through the strategically important Strait of Hormuz.
Key Highlights:
- Brent crude falls 5% to $91.89 per barrel.
- WTI crude drops 5.23% to $84.64 per barrel.
- Markets react positively to the temporary pause in US-Iran hostilities.
- Hope grows for the reopening of shipping routes through the Strait of Hormuz.
- Oil had surged close to $100 per barrel during the recent conflict.
- Shipping traffic remains below normal despite the pause.
- Central banks, including the CBN, remain cautious over inflation risks.
Brent crude futures dropped $4.89, or 5.05%, to $91.89 a barrel by 0009 GMT after briefly falling below the key $90 support level earlier in the session. U.S. West Texas Intermediate (WTI) crude declined $4.67, or 5.23%, to $84.64 a barrel.
Both benchmarks fell to their lowest levels in nearly a week after gaining strongly over the previous three weeks.
The sell-off came as investors responded to signs of a possible diplomatic breakthrough between Washington and Tehran. Oil prices had previously surged toward $100 per barrel as the conflict disrupted shipments through the Strait of Hormuz and affected exports moving through the Bab el-Mandeb Strait.
Analysts said the decline reflects growing optimism that a sustained diplomatic pause could reduce the risk of major disruptions to global oil supply.
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“The current situation is not what they desire,” Iran’s Foreign Ministry spokesman Mohammad Akraminia told state television, while warning that any renewed military escalation could widen the conflict.
The pause followed two weeks of hostilities between the United States and Iran, which had raised concerns over the security of one of the world’s most critical oil shipping routes.
Despite the temporary halt in attacks, shipping activity through the Strait of Hormuz remained subdued during the weekend. According to shipping data from Kpler, fewer than 10 commodity vessels passed through the waterway daily, while traffic through the Bab el-Mandeb Strait also declined after attacks by Yemen’s Houthi forces on Saudi oil facilities along the Red Sea coast.
The Strait of Hormuz remains a vital corridor for global energy trade, carrying a substantial share of the world’s crude oil exports.
The renewed Middle East tensions have also influenced economic policy beyond the region. Earlier this week, the Central Bank of Nigeria (CBN) kept its benchmark interest rate unchanged at 26.5%, citing heightened global uncertainty linked to the conflict.
CBN Governor Olayemi Cardoso said maintaining a cautious monetary stance was necessary to preserve recent gains in inflation moderation, stabilise the foreign exchange market and safeguard macroeconomic stability.
The latest drop in oil prices has raised expectations that fuel prices in Nigeria could eventually ease if the decline in global crude prices is sustained. Before the recent Middle East crisis, petrol prices in many parts of the country ranged between ₦800 and ₦900 per litre, and many consumers are hoping for a return to those levels if geopolitical risks continue to recede.
For now, however, traders remain focused on whether the pause in hostilities will lead to a lasting diplomatic solution or prove only temporary.
