Global crude oil prices declined on Tuesday with Brent crude falling below $91 per barrel as easing tensions between the United States and Iran reduced concerns about disruptions to oil supplies.
Brent crude oil, the international benchmark for Nigerian crude oil, declined by 1.7% to trade at $90.99 per barrel, while US West Texas Intermediate (WTI) fell 1.8% to approximately $85.20 per barrel.
The decline followed signals from US President Donald Trump that Washington could suspend further military strikes against Iran, prompting traders to reassess the risk of prolonged supply disruptions in the Middle East.
Oil prices had risen sharply amid concerns that an escalation of the conflict could affect production facilities, shipping routes and crude exports from the region.
However, the prospect of reduced hostilities has weakened the additional price support that geopolitical uncertainty had provided to the market.
Brent had already recorded a substantial decline in the previous trading session, suggesting that investors were beginning to unwind positions established during the period of heightened tensions.
The latest movement shows how quickly oil prices can respond to changes in geopolitical expectations, even when underlying global demand and production levels remain largely unchanged.
Despite the change in Washington’s position, uncertainty remains over shipping through the Strait of Hormuz, a major route for oil exports from the Persian Gulf.
The United States has maintained its naval blockade in the area, while attacks on commercial vessels have continued. This means the risk of supply disruptions has not disappeared, even as crude prices decline.
Oil traders are also watching production levels among members of the Organisation of Petroleum Exporting Countries (OPEC).
Higher output from Saudi Arabia, Kuwait and Iraq contributed to an increase in OPEC production in October, providing some relief to a market that had been concerned about shortages.
However, increased production will have a limited effect on global supply if exporters cannot move crude freely through important shipping routes.
For Nigeria, the decline presents both opportunities and risks.
As an oil-producing country, Nigeria depends heavily on crude exports for foreign exchange earnings and government revenue. A sustained decline in international prices could reduce the value of oil shipments and put pressure on budget projections.
Lower crude prices could also reduce feedstock costs for domestic refineries, although any benefit to petrol consumers would depend on exchange rates, refining costs, distribution expenses and market pricing.
The immediate concern for Nigeria is whether crude prices stabilise around current levels or continue falling as diplomatic negotiations progress.
While the latest decline suggests that traders expect a reduction in hostilities, the absence of a comprehensive agreement between Washington and Tehran means oil prices remain vulnerable to sudden changes in the conflict.