Brent crude prices fell more than 5% on Monday after the United States and Iran paused attacks over the weekend, raising hopes that diplomacy could de-escalate the conflict and allow shipping to resume through the Strait of Hormuz.

Brent crude futures fell $4.89, or 5.05%, to $91.89 a barrel by 0009 GMT after briefly dropping below the key $90 support level earlier in the session.

U.S. West Texas Intermediate (WTI) crude was trading at $84.64 a barrel, down $4.67, or 5.23%.

Both benchmarks fell to their lowest levels in nearly a week after rising for the previous three weeks.

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What they are saying

The decline came as markets responded to the pause in U.S. and Iranian attacks and the possibility of a diplomatic resolution to the conflict.

Oil prices had previously surged to $100 a barrel as the conflict disrupted shipments through the Strait of Hormuz and spread to the Red Sea, affecting exports from Saudi Arabia, the world’s largest oil exporter, to Asia through the Bab el-Mandeb strait.

The price decline reflects growing expectations that a diplomatic solution could reduce the risks to global oil supply and shipping.

  • “The US may have devised other scenarios for the coming days, but the current situation is not what they desire,” Iran’s Foreign Ministry’s spokesman Mohammad Akraminia told state TV.
  • “If the Americans insist on continuing the war and airstrikes, the geography of the war will expand.”

Get up to speed

The U.S. ambassador to the United Nations, Mike Waltz, told Fox News Sunday and other U.S. media that President Donald Trump had decided to pause U.S. attacks to allow more time for diplomacy.

The pause followed two weeks of attacks between the United States and Iran, which had raised concerns about the security of one of the world’s most important oil shipping routes.

Despite the pause in attacks, shipping activity through the Strait of Hormuz remained limited during the weekend.

More Insights

Fewer than 10 commodity vessels passed through the Strait of Hormuz daily during the weekend, according to shipping data from Kpler.

  • Ship traffic through the Bab el-Mandeb Strait also declined on Sunday after Yemen’s Houthis attacked Saudi oil installations along the Red Sea coast.
  • The Strait of Hormuz remains a key route for global oil shipments.
  • Shipping activity through the waterway remained below normal despite the pause in attacks.
  • Traffic through the Bab el-Mandeb strait also declined.
  • A third Chinese supertanker nevertheless exited through the Bab el-Mandeb strait.

The continued disruption to shipping routes means markets remain focused on whether the pause in hostilities will lead to a sustained reduction in geopolitical risks affecting global oil supplies.

The renewed conflict is already influencing economic policymaking beyond the Middle East, with central banks becoming increasingly cautious over the inflationary risks associated with higher energy prices.

CBN Governor Olayemi Cardoso said the committee decided to leave the benchmark interest rate unchanged after reviewing both domestic and global economic conditions, including the renewed hostilities in the Middle East.

  • He noted that “global uncertainties have heightened due mainly to the renewed hostilities in the Middle East,” adding that “maintaining a cautious 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.

What you should know

Nairametrics earlier reported that Nigerian crude and major oil contracts advanced to a 10-day high as attacks between the US and Iran heightened inflation risk.

Recently, Nairametrics reported that petrol marketers in the country are projecting a drop in the price of fuel to the point that vehicle owners, who had converted to CNG, would be forced to convert back to petrol.

Before the crisis, petrol was selling between N800 and N900 across the country. Many Nigerians are expecting the prices to come back to this level given the latest developments in the global oil market.