Crude oil prices fell sharply on Monday, declining nearly 8 percent after U.S. President Donald Trump announced a five-day extension of a deadline for Iran regarding the Strait of Hormuz. The move has raised expectations for reduced petrol prices in Nigeria, where recent fuel hikes have strained consumers.
Market data shows Brent crude dropped 8 percent to $103.7 per barrel, while West Texas Intermediate fell 7 percent to $91.38 per barrel by Monday afternoon. President Trump cited ongoing talks with Iran as the reason for postponing the deadline, though Iranian authorities have denied any direct or indirect communication with the U.S. administration.
The Strait of Hormuz, a critical chokepoint for global oil shipments, has been central to heightened tensions between Iran and Israel, with U.S. involvement. Previous Iranian threats to close the strait amid the conflict had supported oil prices, making the recent decline a reaction to perceived de-escalation.
In Nigeria, the impact of rising oil costs has been severe. Last week, Dangote Refinery, the nation’s primary refining facility, increased its gantry price—the ex-refinery cost—to N1,245 per liter, attributing the hike to ripple effects from the Middle East geopolitical risks. This triggered retail petrol prices to surge to between N1,367 and N1,440 per liter across filling stations in Abuja and neighboring areas, exacerbating economic pressures for households and businesses.
As crude oil is the principal input for refined petroleum products, a sustained drop in global prices could lower production costs for refiners. If the current trend holds, Dangote Refinery may adjust its gantry price downward, potentially leading to reduced pump prices for Nigerian consumers. Nigeria, despite being Africa’s top oil producer, relies heavily on imported refined fuels, making domestic pricing acutely sensitive to international crude fluctuations.
The market response highlights the volatile interplay between geopolitical events and energy costs. While the deadline extension provides temporary relief, the situation remains fluid. Any resurgence in U.S.-Iran tensions or Middle East hostilities could quickly reverse the price decline. Nigerian regulators and industry stakeholders will monitor crude oil trends closely, as further adjustments to fuel pricing depend on the durability of this market correction and broader supply chain stability.
