Global oil prices declined on Thursday as renewed expectations of possible diplomatic engagement between the United States and Iran eased some concerns over supply disruptions in the Middle East.
Brent crude futures fell by $1.22, or 1.1 per cent, to $114.10 per barrel, while US West Texas Intermediate (WTI) crude declined by $1.33, or 1.3 per cent, to $101.45 per barrel as of 0351 GMT, according to Reuters.
The decline followed gains in the previous session, when Brent crude rose 1.3 per cent and WTI advanced 3 per cent amid renewed concerns over escalating regional tensions.
Market sentiment shifted after reports emerged that US Vice President JD Vance had sent a letter to Iran’s Security Council chief, Mohsen Rezaei, in an effort to revive peace negotiations.
The Wall Street Journal reported the development on Wednesday, citing US officials and people familiar with the matter.
The possibility of renewed diplomatic engagement raised expectations that tensions could ease, potentially reducing the risk of further disruptions to oil production and transportation routes in the region.
Oil markets have remained particularly sensitive to developments involving Iran and other regional actors because of the Middle East’s importance to global crude supply.
Geopolitical risks continue to support prices
Despite Thursday’s decline, the market remained exposed to significant geopolitical uncertainty.
Concerns over intensified attacks by Houthi forces and the possibility of further US military action against Iran continued to limit the extent of the price decline.
Nomura Securities economist Yuki Takashima said selling pressure was prevailing amid expectations that peace negotiations could resume, although the decline in prices remained limited.
The conflicting signals have kept oil traders cautious, with market participants weighing the possibility of diplomatic progress against the risk of further escalation.
The development is particularly important for oil-importing economies such as Nigeria, where changes in international crude prices can influence domestic fuel costs, inflation and foreign exchange inflows.
For Nigeria, higher crude prices can improve government revenue and foreign exchange earnings, provided production levels remain strong. However, elevated international prices can also increase domestic fuel costs and add to inflationary pressures.
The latest movement shows how quickly oil prices can respond to diplomatic signals, even when the underlying geopolitical risks remain unresolved.
Traders are expected to continue monitoring developments around US-Iran relations, regional security and the safety of major oil transportation routes for further direction.
