Global oil prices retreated sharply on Monday after the United States and Iran suspended hostilities, triggering a broad sell-off across energy markets and easing concerns over immediate supply disruptions that had driven crude above the US$100 per barrel mark only days earlier.
As at the time of writing 02:26 a.m (WAT), Brent crude was trading at US$92.41 per barrel, down 4.52 per cent, while West Texas Intermediate (WTI) fell 4.79 per cent to US$85.03 per barrel.
The sharp decline marks the first major correction after nearly two weeks of relentless gains fuelled by military escalation between Washington and Tehran, which at one point pushed Brent crude beyond US$100 per barrel amid fears that the conflict could disrupt global oil supplies through the Strait of Hormuz and the Red Sea.
Market sentiment shifted after Washington announced a temporary suspension of its bombing campaign against Iran, signalling an opportunity for diplomacy. Speaking on Face the Nation, US Ambassador to the United Nations, Mike Waltz, said the military pause was intended to "give diplomacy some space," although he confirmed that additional military assets were being deployed to the region should negotiations fail.
Iran also indicated a willingness to halt retaliatory operations. According to Iranian Foreign Ministry spokesperson Esmaeil Baghaei, recent discussions with Omani mediators had been constructive, while an unnamed Iranian official told Reuters that Tehran's position remained "attack for attack," suggesting that military restraint would continue provided the United States maintained its ceasefire.
The announcement immediately prompted traders to lock in profits after crude's rapid rally, removing a significant portion of the geopolitical risk premium that had accumulated in global oil prices. Analysts noted that much of the recent surge had been driven by fears of supply disruption rather than actual losses in production.
Despite the sharp correction, analysts cautioned that the decline does not necessarily signal a return to stable oil markets. Shipping activity through the Strait of Hormuz and the Red Sea remains constrained, with tanker operators continuing to price in elevated war-risk insurance premiums and security concerns. Freight costs also remain substantially above pre-conflict levels, limiting the speed at which physical oil markets can normalise.
The temporary pause in hostilities comes after weeks of sustained attacks that disrupted tanker movements through some of the world's most strategic energy corridors. Saudi Arabia has increasingly relied on its Red Sea export facilities at Yanbu to reduce dependence on the Strait of Hormuz, while several shipping companies have rerouted vessels or delayed voyages because of persistent security threats.
Beyond the Middle East, supply concerns remain. Kazakhstan has reduced crude exports following drone attacks that affected operations at the Caspian Pipeline Consortium terminal on the Black Sea. Indian state-owned refiners have also suspended some Iraqi crude purchases because of security risks around the Strait of Hormuz, while Russian petroleum exports remain constrained following months of attacks on refinery infrastructure.
For Nigeria, the decline in Brent crude could eventually provide some relief to the downstream petroleum market if the ceasefire holds and crude prices continue to moderate. Brent remains the primary international benchmark used in pricing crude for refining and petroleum imports, meaning lower global prices generally reduce replacement costs for marketers and refiners. Since crude oil accounts for roughly 70 to 80 per cent of the production cost of refined petroleum products, any sustained decline could ease pressure on ex-depot petrol, diesel and aviation fuel prices.
However, industry observers warn that any benefit to Nigerian consumers is unlikely to be immediate. Existing inventories purchased at higher crude prices, elevated freight rates, foreign exchange costs and insurance premiums are expected to keep domestic fuel prices under pressure in the near term. Unless diplomatic progress evolves into a durable agreement that restores confidence in global shipping routes, oil markets are expected to remain highly volatile, with prices continuing to react sharply to every development from Washington and Tehran.