Oil Market Reacts to US-Iran Ceasefire – THIS UPDATE

By Ayo Kehinde

Brent crude prices fell more than 5% on Monday after the United States and Iran suspended attacks over the weekend, easing concerns about potential disruptions to global oil supplies and raising expectations that diplomatic efforts could help contain the conflict.

Brent crude futures fell $4.89, or 5.05%, 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 fell $4.67, or 5.23%, to $84.64 a barrel.

The sharp decline came after three consecutive weeks of gains that had seen both benchmarks rise near the $100-a-barrel level as tensions between the United States and Iran heightened fears of supply disruptions across the Middle East.

Market sentiment improved after Washington suspended military action to allow more time for diplomatic engagement, reducing immediate concerns about the security of one of the world’s most critical oil transit routes.

The Strait of Hormuz handles about a fifth of global oil shipments, making any disruption to traffic through the waterways a major concern for global energy markets.

“The United States may have come up with other scenarios for the next few days, but the current situation is not what they want,” Iranian Foreign Ministry spokesman Mohammad Akraminia said in comments broadcast on state television.

He warned, however, that the conflict could escalate again if military operations resumed.

The US ambassador to the United Nations, Mike Waltz, also said that President Donald Trump had decided to suspend the attacks to give more time for diplomacy after two weeks of hostility between the two countries.

Despite the easing of market sentiment, shipping activity along key regional waterways remained below normal over the weekend.

According to maritime intelligence firm Kpler, fewer than 10 merchant ships transited the Strait of Hormuz daily during the period, while traffic through the Bab el-Mandeb Strait also declined following Yemeni Houthi attacks on Saudi oil installations along the Red Sea coast.

Although a Chinese supertanker has successfully exited the Bab el-Mandeb Strait, traders remain cautious as shipping flows are yet to return to normal levels.

Analysts say markets will continue to monitor developments closely, as any new escalation could quickly reverse Monday’s price decline.

Renewed conflict in the Middle East is already influencing economic policy outside the region, including Nigeria.

At its latest monetary policy committee meeting, the Central Bank of Nigeria maintained the monetary policy rate at 26.5%, with Governor Olayemi Cardoso citing heightened global uncertainty stemming from renewed hostilities in the Middle East.

According to Cardoso, maintaining a prudent stance in terms of monetary policy remains appropriate as the apex bank seeks to preserve recent gains in moderating inflation, stabilize the foreign exchange market and safeguard macroeconomic stability.

While Monday’s drop in crude prices eased immediate concerns about global supply disruptions, investors will be watching closely to see whether the pause in hostilities turns into a lasting diplomatic breakthrough or turns out to be just a truce.

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