Global oil prices traded largely steady on Monday as investors weighed US President Donald Trump’s indication that he was unlikely to launch fresh attacks on Iran against continuing security concerns around the strategically important Strait of Hormuz.
Brent crude futures rose marginally by three cents to $98.35 per barrel by 0427 GMT, while US West Texas Intermediate crude gained 0.5 per cent to $91.30 per barrel.
The relatively stable movement followed a sharp correction in the previous trading week, when Brent crude plunged 16 per cent, recording its steepest weekly decline since the beginning of the COVID-19 pandemic.
Market sentiment improved after Trump said on Sunday that he was highly unlikely to order fresh military strikes against Iran as long as negotiations aimed at ending the conflict continued to make progress.
The comments raised expectations of a possible diplomatic breakthrough and reduced some immediate concerns about further military escalation in the Middle East.
However, attacks on vessels in or around the Strait of Hormuz continued to keep oil supply risks in focus, limiting the extent of the market’s recovery.
The Strait of Hormuz is one of the world’s most important energy shipping routes, serving as a critical passage for crude oil and petroleum products moving from major Middle Eastern producers to international markets.
Any prolonged disruption to shipping through the waterway could affect global energy supplies, increase transportation costs and trigger renewed volatility in international oil prices.
Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet, said geopolitical risks remained elevated despite growing optimism about a potential diplomatic breakthrough.
She noted that the market appeared to be pricing in a relatively favourable de-escalation scenario even though a comprehensive agreement between Washington and Tehran had yet to materialise.
The competing developments have left oil traders balancing the prospect of improved diplomatic relations against the possibility of renewed military escalation and further disruptions to energy shipments.
For oil-importing countries such as Nigeria, movements in international crude and refined petroleum prices remain important because they influence domestic fuel supply costs, inflation expectations and foreign exchange requirements.
Although Nigeria is a crude oil producer, the domestic benefits of higher international oil prices depend partly on production levels, export performance, government revenue and the country’s capacity to meet local petroleum product demand.
The market will therefore remain sensitive to diplomatic developments, shipping security and any further indications of changes in the supply outlook from the Middle East.
