Oil prices fell 1% on Monday as immediate fears of a wider conflict in the Middle East eased following signals from the United States and Iran that they would continue talks over Tehran’s nuclear programme.
Brent crude oil, against which Nigerian crude oil is priced, slipped 67 cents, or 1% to $67.38 a barrel by 5:44 a.m. in Nigeria, while U.S. West Texas Intermediate crude fell 61 cents, or 1%, to $62.94 a barrel. Both benchmarks extended losses from last week, when prices declined more than 2%.
“With more talks on the horizon the immediate fear of supply disruptions in the Middle East has eased quite a bit,” said IG market analyst Tony Sycamore.
The price decline followed confirmation that Washington and Tehran agreed to continue indirect nuclear negotiations after what both sides described as constructive discussions held on Friday in Oman, despite lingering differences.
The talks helped reduce concerns that a breakdown in diplomacy could push the region closer to military confrontation, especially after the U.S. increased its military presence in the Middle East in recent weeks.
Markets had been pricing in higher risk premiums amid fears that an escalation involving Iran could threaten oil flows through the Strait of Hormuz, a critical chokepoint through which roughly a fifth of global oil consumption passes daily.
Any disruption to shipments through the strait could significantly impact global supply, given the volume of crude exported by Iran and other major producers in the region.
Despite Monday’s pullback, analysts cautioned that volatility remains elevated as geopolitical risks have not fully dissipated.
Iran’s foreign minister said on Saturday that Tehran would strike U.S. bases in the Middle East if it came under attack by U.S. forces, underscoring that the threat of conflict is still present.
“Volatility remains elevated as conflicting rhetoric persists. Any negative headlines could quickly reignite risk premiums in oil prices this week,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Beyond Middle East tensions, investors are also monitoring developments related to Russian oil exports, as Western governments step up efforts to curb Moscow’s energy revenues amid its ongoing war in Ukraine.
On Friday, the European Commission proposed a sweeping ban on services that support Russia’s seaborne crude oil exports, a move that could further disrupt global oil trade flows.
Refiners in India, previously the largest buyers of Russia’s seaborne crude, have reportedly scaled back purchases for delivery in April and are expected to remain cautious for an extended period, according to refining and trade sources.
The shift could have broader implications for global supply chains and may support New Delhi’s efforts to advance a trade agreement with Washington.
“Oil markets will remain sensitive to how broadly this pivot away from Russian crude unfolds, whether India’s reduced purchases persist beyond April, and how quickly alternative flows can be brought online,” Sachdeva said.
While easing diplomatic tensions between the U.S. and Iran have temporarily relieved supply concerns, traders remain cautious as multiple geopolitical and policy-driven risks continue to shape the oil market outlook in the weeks ahead.
