Brent crude has fallen by more than $16 per barrel in just eight trading sessions, retreating sharply from the $100 mark as renewed diplomatic efforts between the United States and Iran eased fears of prolonged disruptions to global oil supplies through the Strait of Hormuz.
Market data on Monday showed that West Texas Intermediate (WTI) crude declined 5.24% to $80.23 per barrel at the open, while Brent crude dropped to $83.86 per barrel, extending a selloff that has erased most of the conflict-driven gains recorded in late July.
The decline follows Brent’s surge to $100.30 per barrel on July 23 and WTI’s rise to $91.70 per barrel, their highest levels since May, after renewed military strikes between the United States and Iran heightened concerns over supply disruptions across the Middle East.
The latest price correction came after U.S. President Donald Trump announced that fresh negotiations with Iran would begin on Monday afternoon, following his decision to cancel a planned military strike that he described as potentially the largest U.S. military operation since World War II.
Speaking to reporters aboard Air Force One on Sunday, Trump said his administration was prioritising diplomacy over military escalation.
“We’re just going to see whether or not we can make a deal,” Trump said.
He added that he was not seeking further bloodshed and believed negotiations offered a better path than continued military action.
Trump also disclosed that Saudi Crown Prince Mohammed bin Salman had urged him over the weekend to continue diplomatic engagement rather than proceed with the planned strikes.
According to the U.S. President, regional allies feared that a broader conflict could destabilise the Middle East, worsen humanitarian conditions, and trigger wider economic disruptions.
His remarks strengthened market expectations that Washington and Tehran could reach a diplomatic settlement, reducing the risk of prolonged disruptions to shipping through the Strait of Hormuz, the strategic waterway that handles roughly one-fifth of global oil trade.
Meanwhile, Iranian Foreign Minister Abbas Araghchi said negotiations involving Iran and Oman were in their final stages. Although officials indicated the talks were centred on maritime arrangements, they did not confirm whether the discussions would directly determine the reopening of the Strait of Hormuz.
The latest selloff follows an earlier decline on July 27, when Brent crude dropped by as much as 5% after the United States and Iran paused attacks the previous weekend, boosting optimism that diplomacy could help restore normal shipping operations.
During that session, Brent futures fell $4.89, or 5.05%, to $91.89 per barrel, while WTI declined $4.67, or 5.23%, to $84.64 per barrel. Brent also briefly slipped below the key $90 support level.
The correction came only days after oil prices had climbed close to $100 per barrel amid fears that renewed hostilities between Washington and Tehran could significantly disrupt crude exports from the Gulf.
Concerns over a possible closure or restriction of traffic through the Strait of Hormuz had previously fuelled the rally, with traders anticipating tighter global oil supplies.
Despite the recent decline, global crude prices remain well above Nigeria’s 2026 budget benchmark of $64.85 per barrel, offering the prospect of stronger government oil revenues if prices remain elevated.
However, higher global oil prices have also increased costs for Nigerian consumers.
Before the conflict escalated, petrol sold for between N770 and N800 per litre at many filling stations. Prices have since risen to as much as N1,300 per litre in some parts of the country, increasing transportation costs and adding to inflationary pressures.
Looking ahead, oil prices will also be influenced by supply decisions from major producers.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) has approved a production quota increase of 188,000 barrels per day for September. The move marks the fourth consecutive monthly output increase as the producer group continues unwinding supply cuts introduced in 2023.
The additional supply is expected to place further downward pressure on crude prices if geopolitical tensions continue to ease and diplomatic efforts between the United States and Iran make further progress.
