Oil prices declined on Friday as easing fears of an immediate United States military attack on Iran reduced the geopolitical risk premium in crude markets, reversing part of the sharp gains recorded in the previous session.
Brent crude oil, the international benchmark for Nigerian crude oil, fell 92 cents to $103.36 per barrel, while United States West Texas Intermediate crude declined 75 cents to $90.74 per barrel.
The retreat followed comments by US President Donald Trump that Washington was holding productive discussions with Iran and was not planning military strikes before the November 3 midterm congressional elections.
The announcement offered some reassurance to energy traders after renewed concerns over military escalation and attacks on commercial vessels pushed crude prices sharply higher on Thursday.
Both major benchmarks gained approximately four percent in the previous session as traders assessed disruptions to oil shipments from the Middle East alongside production shutdowns in the United States.
The latest diplomatic signals have reduced immediate fears of further escalation, although the conflict continues to threaten oil production, transportation and petroleum-product supplies.
Iran’s Foreign Minister Abbas Araqchi indicated that Tehran was reviewing Washington’s response to an Iranian proposal that could allow the Strait of Hormuz to reopen within seven days.
The waterway remains central to global energy security because approximately one-fifth of international oil and fuel trade passed through it before the conflict.
Disruptions to tanker movements have forced producers and trading companies to adjust export routes, contributing to higher freight costs and volatility in crude prices.
Washington has also maintained economic pressure on Iran despite the diplomatic discussions.
The United States announced additional sanctions targeting individuals, commercial networks and 17 vessels allegedly involved in transporting Iranian crude oil, petroleum products and petrochemicals.
Meanwhile, the international oil market is facing another supply disruption outside the Middle East.
Hurricane Isaias has forced operators in the US Gulf of Mexico to suspend approximately 1.3 million barrels per day of production, equivalent to 62.9 percent of the region’s operating crude output as of Thursday.
The shutdown has reduced near-term American oil availability and helped limit the decline in international prices.
Oil traders are consequently weighing two competing developments: the possibility of improved Middle East shipping conditions and the immediate loss of substantial US offshore production.
The International Energy Agency’s accelerated emergency stock releases and China’s planned resumption of refined petroleum exports could also provide some relief to global fuel markets.
However, the extent of that relief will depend on how quickly additional crude and petroleum products become available to refiners and consumers.
Despite Friday’s decline, Brent remains on course for a weekly gain, reflecting the strength of the previous session’s rally and continuing concerns over supply security.
For Nigeria, sustained crude prices above $100 per barrel could support the value of oil exports and government petroleum revenue, provided production and export volumes remain stable.
However, elevated international energy prices can also increase the cost of refined petroleum products, shipping and other imported goods.
The next major direction for crude prices will depend on developments in US-Iran negotiations, the security of tanker movements through the Strait of Hormuz and the pace at which Gulf of Mexico production resumes after the hurricane.
