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Oil prices fell on Friday, October 9, after US President Donald Trump ruled out an attack on Iran before next month’s congressional elections, easing immediate fears of further supply disruptions.
Brent crude futures fell 92 cents, or 0.9%, to $103.36 a barrel, while U.S. West Texas Intermediate fell 75 cents, or 0.8%, to $90.74 at 7:32 a.m. WAT, according to Reuters. These were intraday prices.
“We are having productive discussions with the Islamic Republic of Iran,” Trump wrote Thursday.
He said Washington would not launch an attack before the Nov. 3 midterm elections. His statement provided a timetable for avoiding military action but did not announce a peace deal or the reopening of the Strait of Hormuz.
The economic pressure continued in parallel with the diplomatic overtures. On October 8, the US Treasury announced sanctions against 17 ships accused of carrying Iranian crude, oil and petrochemicals to markets in South and East Asia.
The Treasury described the ships as part of Iran’s shadow fleet, the network it uses to move oil despite sanctions. The announcement shows that the talks have not ended Washington’s campaign against Iranian oil exports.
As a result, Friday’s price decline reflects an easing of immediate concerns rather than confirmation that disrupted supplies are returning to normal.
For Nigeria, a prolonged decline in crude oil prices would have competitive effects. It could reduce the cost of raw materials for refineries while lowering the dollar value of crude exports, assuming production and sales volumes remain unchanged.
However, motorists purchase refined gasoline, the price of which includes additional costs compared to the crude oil used to produce it. Refining, distribution and retail expenses also contribute to the final bill, as the U.S. Energy Information Administration explains in its breakdown of fuel prices. Its numbers are for the American market, but the separate production and delivery phases help explain why crude oil prices and pump prices don’t move in lockstep.
For Nigerian shoppers, exchange rates add another variable. A decline in dollar-denominated oil prices may be partially offset if the naira weakens. Existing inventories and the timing of new purchases can also delay changes in wholesale and retail prices.
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