By Samuel Solomon
Oil prices continued their downward trend on Monday following the signing of a ceasefire agreement between the United States and Iran to end hostilities in the Middle East and reopen the Strait of Hormuz.
According to Oilprice.com, Brent crude, the global benchmark, dropped from $87 per barrel on Sunday to $83 per barrel on Monday. The US and Iran said they reached an agreement on Sunday to end the war, a development that further pushed down oil prices.
Thus, petrol could drop to as low as N900 per litre in the coming days if the peace deal between the United States and Iran materialised.
With US President Donald Trump announcing the signing of the peace deal and a partial reopening of the Strait of Hormuz, oil prices fell further, fuelling speculation of an imminent fuel price reduction in the coming days should the crisis fully de-escalate.
Recall that crude oil, which traded at over $120 per barrel in April, had already fallen to about $87 per barrel as of Sunday and further declined to $83 on Monday.
Crude oil, the major feedstock for fuel production, rose from below $70 per barrel after the US-Iran conflict began on February 28. During the more than three months of hostilities, crude traded above $100 and at some points exceeded $120 per barrel, leading to a sharp increase in fuel prices globally. It is expected that this trend would now reverse following the latest developments.
According to Reuters, a US official said the memorandum of understanding was signed by Trump, Vice President JD Vance and Iranian parliament speaker Mohammad Bagher Qalibaf.
Trump said the text of the deal would be released after a formal signing on Friday. The US stated that the deal provides for the immediate opening of the Strait of Hormuz and the lifting of the US blockade on Iran.
The agreement, it was learnt, would extend a ceasefire for a 60-day negotiation period, during which contentious issues such as the future of Iran’s nuclear programme are expected to be decided.
Reuters reported that a senior US official also said the United States was prepared to release frozen Iranian funds. “We are prepared to give these sanctions, and we’ll do some small gestures of that in the beginning. If they make some small gestures to us that show that they’re willing to meet their commitments as well.
“Those will be kind of small and easy to kind of see the cards, but that’ll be based on performance. We’re going to get together this week and talk about what we want to do and when we do it,” the source said.
Before the deal was announced, a senior Iranian official told Reuters that, under the terms of the draft, the United States would agree to release $25bn of frozen Iranian assets.
The Trump administration has previously said any release of Iranian funds would only take place once Iran fulfils certain conditions under a peace deal.
At the moment, Nigerians are waiting for a significant drop in petrol prices. However, a Dangote Petroleum Refinery official, while saying petrol could fall to N900 per litre, cautioned that the refinery still had the “expensive crude” in its tanks.
