Oil Prices Fall Over 5% on Hopes of U.S.-Iran Peace Deal

Global crude oil prices plunged on Monday as growing optimism surrounding a potential peace agreement between the United States and Iran eased fears of prolonged supply disruptions across the Middle East.

Brent crude, against which Nigerian oil is priced, declined by more than 4.9 percent to $98.45 per barrel while U.S. West Texas Intermediate (WTI) crude dropped 5.4 percent to $91.38 per barrel with both benchmarks touching their lowest levels since May 7.

The sharp decline followed reports that Washington and Tehran may be moving closer to an understanding that could lead to the reopening of the Strait of Hormuz, a key global shipping route responsible for transporting nearly one-fifth of global oil and gas supplies.

U.S. President Donald Trump reportedly stated that an agreement in principle had been reached, although negotiations remain ongoing and several issues are still unresolved.

The development significantly reduced the geopolitical risk premium that had supported oil prices in recent weeks amid concerns over restricted tanker movements and supply disruptions linked to tensions involving Iran.

Financial markets responded positively to the possibility of de-escalation in the region as investors rotated back into equities while reducing safe-haven and energy positions.

Global stock markets advanced while the U.S. dollar weakened against major currencies.

Despite the market optimism, analysts warned that oil prices could remain elevated relative to pre-conflict levels due to lingering uncertainty around the negotiations and the time required to restore damaged infrastructure and normalize shipping flows.

Energy analysts noted that even if a formal agreement is reached, restoring full operational stability across the Strait of Hormuz and broader regional supply chains could take several months.

The recent oil market volatility has heightened inflation concerns globally and complicated monetary policy expectations as higher energy prices continue to pressure transportation, manufacturing and food supply chains.

For Nigeria, weaker crude oil prices could place renewed pressure on foreign exchange inflows and government revenue projections given the country’s heavy dependence on oil exports to support fiscal spending and external reserves.

However, lower oil prices may also ease concerns over imported fuel costs and inflationary pressures if the downward trend is sustained in the coming weeks.