Oil Prices Slide 2% as Trump Signals Pause in Iran Strikes

International crude oil prices opened the week lower as US President Donald Trump signalled that Washington had no immediate plans for further military strikes against Iran, easing some concerns over a prolonged conflict and potential disruptions to global oil supply.

As at the time of writing at 8:12 (WAT), Brent crude declined by 1.80 per cent to $96.55 per barrel, while West Texas Intermediate (WTI) fell by 1.32 per cent to $89.63 per barrel.

The market reaction followed Trump's comments in an interview with CNN on Sunday, in which he suggested that further US military action against Iran was unlikely to be necessary if Tehran agreed to a strong deal. Although he did not rule out additional strikes, his remarks indicated that Washington was not preparing an immediate escalation.

The prospect of a diplomatic opening has encouraged traders to reassess the geopolitical risk premium embedded in crude prices, particularly after both Brent and WTI recorded losses of about 13 per cent last week following the Democrats' victory in the US midterm elections.

However, the decline in prices comes against a backdrop of persistent security threats to oil and shipping infrastructure in the Middle East. Reports of fresh attacks on tankers in the Strait of Hormuz, including a statement by Iran's Islamic Revolutionary Guard Corps that three tankers were on fire on Sunday, have kept supply concerns firmly in focus.

The Strait of Hormuz remains a critical chokepoint for global oil trade, making any disruption to tanker movements a significant risk to crude and refined-product supply. Consequently, the market is weighing the prospect of diplomatic de-escalation against the continuing threat to vessels and energy shipments across the region.

Market analysts say traders are still assessing whether the US midterm election outcome will lead to a sustained change in Trump's approach to the conflict or merely a temporary shift in rhetoric. KCM Trade chief analyst Tim Waterer said the market was waiting to determine whether the elections had produced a lasting change in Washington's position.

Earlier, Saxo Bank's Ole Hansen said expectations of an end to the conflict, alongside recovering Middle East crude flows, had raised hopes that extraordinary supply disruptions and elevated energy prices could gradually ease.

For Nigeria's downstream market, the direction of international crude and refined-product benchmarks remains important to import-parity calculations and the pricing of petroleum products. However, any reduction in crude prices does not automatically translate into an equivalent fall in petrol or diesel landing costs, which also depend on refined-product quotations, exchange rates, freight, insurance and financing charges.

The immediate outlook for crude prices will therefore depend on whether diplomatic signals translate into a sustained reduction in regional tensions and whether tanker movements through the Strait of Hormuz recover.