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Brent crude fell more than 5 percent on Monday after the United States and Iran paused attacks over the weekend, raising hopes that diplomatic efforts could ease tensions in the Middle East.
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The decline followed weeks of sharp gains that pushed oil prices close to $100 a barrel amid concerns that the conflict could disrupt supplies through the Strait of Hormuz.
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The renewed hostilities have also influenced monetary policy in Nigeria, with the Central Bank citing heightened geopolitical risks as one of the reasons for retaining the benchmark interest rate at 26.5 percent.
July 27, (THEWILL) — Brent crude prices fell more than 5 percent on Monday after the United States and Iran paused attacks over the weekend, easing concerns over potential disruptions to global oil supplies and lifting expectations that diplomatic efforts could help contain the conflict.
Brent crude futures dropped $4.89, or 5.05 percent, to $91.89 a barrel by 0009 GMT after briefly slipping below the $90 mark earlier in the session. U.S. West Texas Intermediate (WTI) crude also declined by $4.67, or 5.23 percent, to $84.64 a barrel.
The sharp decline came after three consecutive weeks of gains that had seen both benchmarks climb close to the $100-per-barrel level as tensions between the United States and Iran heightened fears of supply disruptions across the Middle East.
Diplomatic hopes weigh on oil
Market sentiment improved after Washington paused military action to allow more time for diplomatic engagement, reducing immediate concerns over the security of one of the world’s most critical oil transit routes.
The Strait of Hormuz handles roughly a fifth of global oil shipments, making any disruption to traffic through the waterway a major concern for global energy markets.
“The US may have devised other scenarios for the coming days, but the current situation is not what they desire”, Iran’s Foreign Ministry spokesman, Mohammad Akraminia, said in comments aired on state television.
He warned, however, that the conflict could escalate again if military operations resumed.
The U.S. ambassador to the United Nations, Mike Waltz, also said President Donald Trump had decided to pause attacks to provide additional time for diplomacy after two weeks of hostilities between both countries.
Shipping disruptions persist
Despite the easing in market sentiment, shipping activity across key regional waterways remained below normal over the weekend.
According to shipping intelligence firm Kpler, fewer than 10 commodity vessels transited the Strait of Hormuz daily during the period, while traffic through the Bab el-Mandeb Strait also declined following attacks by Yemen’s Houthis on Saudi oil installations along the Red Sea coast.
Although a Chinese supertanker successfully exited through the Bab el-Mandeb Strait, traders remain cautious as shipping flows have yet to return to normal levels.
Analysts say markets will continue to monitor developments closely, as any renewed escalation could quickly reverse Monday’s price decline.
Nigeria watches global developments
The renewed Middle East conflict is already influencing economic policy beyond the region, including in Nigeria.
At its latest Monetary Policy Committee meeting, the Central Bank of Nigeria retained the Monetary Policy Rate at 26.5 percent, with Governor Olayemi Cardoso citing heightened global uncertainty arising from renewed hostilities in the Middle East.
According to Cardoso, maintaining a cautious monetary policy stance remains appropriate as the apex bank seeks to preserve recent gains in inflation moderation, stabilise the foreign exchange market and safeguard macroeconomic stability.
While Monday’s decline in crude prices eased immediate concerns over global supply disruptions, investors will be watching closely to see whether the pause in hostilities develops into a lasting diplomatic breakthrough or proves to be only a reprieve.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
