Oil Prices Slip as Traders Monitor Fragile U.S.-Iran Talks, Supply Risks Persist

Oil prices declined on Wednesday as investors assessed developments surrounding the fragile U.S.-Iran negotiations after crude rallied sharply in the previous session on fears of escalating supply disruptions in the Middle East.

Brent crude oil, against which Nigerian crude oil is priced, fell by $1.42, or 1.43 percent to $98.16 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped $1.66, or 1.77 percent to settle at $92.23 a barrel.

The pullback followed a nearly 4 percent surge recorded on Tuesday after renewed military tensions between the United States and Iran intensified concerns over crude supply flows through the Strait of Hormuz, one of the world’s most critical oil transit routes.

Reuters reported that traders are closely watching whether ongoing diplomatic efforts can prevent further disruptions to shipping activity in the Strait of Hormuz, a strategic channel responsible for transporting a significant portion of global crude exports.

Market sentiment remains volatile as geopolitical risks continue to overshadow concerns about slowing global demand and rising oil supply from OPEC+ producers.

Earlier this month, oil prices remained above the $100 per barrel mark as investors reacted to supply risks tied to Middle East tensions and uncertainty surrounding U.S.-Iran relations.

Brent crude settled at $105.63 per barrel on May 13, while WTI closed at $101.02.

Analysts said the market remains highly sensitive to any escalation capable of disrupting exports from major oil-producing nations in the Gulf region.

Despite the recent decline, supply concerns continue to support prices amid fears that a prolonged conflict could tighten the global oil market during the peak summer demand season.

Meanwhile, some liquefied natural gas tankers reportedly resumed movement through the Strait of Hormuz, offering cautious optimism that energy flows may gradually normalise if diplomatic negotiations progress.

Oil traders are also monitoring signals from OPEC+ regarding future production levels as well as economic data from major economies for indications of demand strength in the months ahead.