Oil prices drop over 5% as US-Iran peace deal hopes ease supply fears

Brent crude fell 4.9% to $98.45 per barrel and WTI dropped 5.4% to $91.38, both hitting their lowest levels since May 7, after reports of a potential US-Iran agreement in principle.

The price drop was driven by optimism that the Strait of Hormuz, a shipping route carrying nearly one-fifth of global oil and gas supplies, could reopen, reducing the geopolitical risk premium built into recent prices.

For Nigeria, analysts warn that weaker crude prices could pressure foreign exchange inflows and government revenue, though sustained lower prices may also ease imported fuel costs and inflation.

Nigerian government revenue planners and the CBN face a near-term squeeze: if Brent crude sustains a decline toward or below current levels, oil export earnings, Nigeria's primary source of foreign exchange, will shrink, tightening FX liquidity and potentially widening the fiscal deficit in the months ahead.

Energy analysts cited in the article caution that even a formal US-Iran deal could take several months to fully stabilise regional supply chains, meaning oil price volatility is unlikely to resolve quickly.

Nigerian businesses and importers dependent on a stable naira should watch whether this price decline holds through the next 4–8 weeks, as a sustained drop would test the CBN's ability to defend FX reserves while managing inflation.