Crude Oil Falls Below $80 as US-Iran Peace Deal Removes War Premium

Crude oil prices fell below $80 a barrel on Tuesday for the first time since March, as traders priced in the removal of the geopolitical risk premium that had supported higher prices since the US-Iran conflict escalated earlier this year.

Brent crude, the international benchmark, slumped 5.5 per cent to $78.58 a barrel, its lowest level since March 3, while West Texas Intermediate (WTI), the US benchmark, dropped 6.3 per cent to $75.66 a barrel, Thisday reported.

The development follows the late-Sunday agreement between Washington and Tehran to extend their ceasefire and reopen the Strait of Hormuz, which had been effectively shut since late February.

The reopening of the strait, a critical chokepoint through which about a fifth of global oil shipments pass, has eased supply concerns and triggered a wave of selling across energy markets.

The International Energy Agency (IEA) has separately warned that the market may swing into surplus later this year as new supply from non-OPEC producers comes online and demand growth in major economies slows.

For Nigeria, the price drop raises fresh concerns about oil revenue, which still accounts for the majority of foreign exchange earnings and government revenue despite years of diversification efforts.

The slump comes at a sensitive time for the Nigerian National Petroleum Company (NNPC) and the Federation Account, which depend on benchmark prices for monthly revenue projections and federal allocation to states.

Analysts told Thisday that Nigeria’s budget benchmark of around $75 per barrel means current prices remain above the threshold, but a sustained drop below that level would force a downward review of spending plans.

The development follows Post 4144 (US-Iran peace deal) and Post 4067 (Dangote Refinery increasing Nigerian crude intake), as the regional conflict’s end reshapes global oil market dynamics.

Sources: Thisday; Businessday; New Telegraph