Global crude oil prices fell sharply on Monday after U.S. President Donald Trump delayed a planned military strike against Iran and renewed efforts to secure a nuclear agreement, raising hopes of easing tensions in the Middle East and restoring normal shipping through the Strait of Hormuz.
Gatekeepers News reports that Brent crude, the benchmark for Nigerian oil exports, dropped $4.65, or 5.29 per cent, to $83.28 per barrel. U.S. West Texas Intermediate (WTI) also declined by $5.20, or 6.14 per cent, to $79.47 per barrel.
The decline reflected a reduction in the geopolitical risk premium that had driven oil prices higher in recent weeks, as investors assessed the possibility that renewed diplomacy could ease disruptions to global energy supplies.
Crude prices had surged by more than 20 per cent in July after fresh hostilities between the United States and Iran, coupled with attacks on oil tankers near Oman, intensified concerns over the safety of shipping routes in the Gulf.
Trump said Iran and other Middle Eastern countries had requested more time to pursue a diplomatic resolution that could pave the way for the full reopening of the Strait of Hormuz while addressing international concerns over Tehran’s nuclear programme.
He also disclosed that negotiations with Iran were expected to begin on Monday, although he did not indicate when the talks were expected to conclude.
The Strait of Hormuz remains one of the world’s most strategic energy corridors, with disruptions to the waterway affecting roughly 20 per cent of global oil and gas shipments during the conflict.
Despite the renewed diplomatic push, risks to energy transportation remain high. Shipping activity through the strait has slowed following reports of attacks on commercial vessels, while the United Kingdom Maritime Trade Operations said three additional tanker attacks had been recorded since Saturday.
Supply expectations were also influenced by a decision from the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to increase production quotas by about 188,000 barrels per day beginning in September.
The increase completes the gradual reversal of a voluntary 1.65 million barrels-per-day production cut introduced in 2023.
However, export disruptions in the Gulf, Russia and Kazakhstan have limited the impact of previous production increases, preventing much of the additional output from reaching international markets.
OPEC+ also continues to maintain another round of production curbs totalling about 2 million barrels per day, with those restrictions expected to remain in force until the end of 2026.
Although oil prices have fallen significantly, they remain well below the highs recorded during the peak of the Iran crisis. Brent crude reached $126.41 per barrel on April 30 before retreating as expectations of diplomatic progress began to improve market sentiment.
Market analysts say the next direction for oil prices will largely depend on the outcome of negotiations between Washington and Tehran.
A successful agreement that leads to the reopening of the Strait of Hormuz could boost global oil supplies and keep prices under pressure. However, any renewed military confrontation or further attacks on oil tankers could quickly revive geopolitical concerns and send crude prices higher once again.
