Brent crude traded above $84 per barrel on Monday as investors reassessed geopolitical risks in the Middle East with uncertainty surrounding shipping through the Strait of Hormuz continuing to support oil prices despite concerns about slowing global demand.
Brent crude oil, against which Nigerian crude oil is priced, rose to around $84 per barrel, while U.S. West Texas Intermediate (WTI) traded above $79 per barrel.
The rebound reflects renewed caution among traders after optimism over a quick resolution to tensions around the Strait of Hormuz faded.
Although diplomatic efforts to reduce tensions between the United States and Iran remain ongoing, uncertainty over the future of commercial shipping through the strategic waterway has prevented oil prices from extending last week’s decline.
The Strait of Hormuz remains one of the world’s most important energy corridors, handling roughly one-fifth of global crude oil and liquefied natural gas exports.
Any disruption to tanker movements through the route has the potential to tighten global supplies, increase freight costs and inject additional volatility into international energy markets.
Analysts said the market is now balancing two competing forces.
On one hand, geopolitical uncertainty continues to provide support for crude prices as traders maintain a risk premium amid unresolved tensions in the Gulf.
On the other hand, expectations of slower economic growth in major consuming economies and rising crude inventories in some regions continue to weigh on the broader demand outlook.
Investors are also monitoring OPEC+ production policy after the producer alliance continued with plans to gradually restore previously curtailed output.
Additional barrels from OPEC+ members could ease supply pressures later in the year, although any meaningful disruption in the Middle East could quickly offset those increases.
For Nigeria, the recovery in crude prices provides support for government revenue and foreign exchange earnings, with oil exports remaining the country’s largest source of export receipts.
Higher Brent prices generally improve fiscal performance, strengthen external reserves and support the implementation of the Federal Government’s budget assumptions.
The rebound also comes as Nigeria seeks to increase crude production through new upstream investments while expanding exports of newer crude grades alongside established streams such as Bonny Light, Qua Iboe and Forcados.
Meanwhile, global financial markets remain focused on developments in the United States after weaker-than-expected labour market data raised expectations that the Federal Reserve may delay further interest-rate increases.
A softer interest-rate outlook could support economic activity and fuel demand over the medium term, although concerns about slowing global growth continue to temper bullish sentiment in oil markets.
Market participants are expected to closely monitor developments in the Middle East, OPEC+ supply decisions and upcoming economic data from major economies for further direction.
With Brent holding above $84 per barrel, geopolitical developments remain the dominant driver of short-term price movements, while the balance between supply risks and demand expectations is likely to determine whether crude extends its recovery or resumes last week’s downward trend.