The world is witnessing a sharp drop in crude oil prices, which raises the issue of how the domestic market would react to the global trend.

The fall in oil prices came on Monday after United States President Donald Trump signalled a shift from military action against Iran to renewed diplomatic talks, easing fears of a wider conflict in the Middle East. The development calmed global oil markets, where traders had been worried that fighting in the region could disrupt crude supplies.

Brent crude, the international benchmark used to price Nigerian oil, dropped by more than 4.8 per cent to around $83.70 per barrel, while the U.S. West Texas Intermediate (WTI) crude fell by over 5 percent to about $79.60 per barrel. The decline marked one of the biggest single-day losses in recent months.

The price drop followed Trump’s announcement that he had suspended plans for a military strike on Iran and was instead pursuing a deal aimed at ending tensions over Tehran’s nuclear programme and reopening the strategic Strait of Hormuz.

In a message posted on his Truth Social platform, Trump said: “Iran and all other players have requested time to finalize a deal.”

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The Strait of Hormuz is one of the world’s busiest oil shipping routes, with nearly a fifth of global crude exports passing through it. Any threat to shipping in the area usually pushes oil prices higher because traders fear supply shortages.

For weeks, uncertainty surrounding the conflict had driven oil prices sharply upward, raising the cost of petrol, diesel, aviation fuel and other refined products across many countries, including Nigeria.

Energy analysts say the latest decline in crude prices could eventually translate into lower fuel prices if the trend continues.

Nigeria now operates a deregulated downstream petroleum market, meaning petrol prices largely reflect global crude prices, exchange rates, shipping costs and local distribution expenses.

When crude oil becomes cheaper, the cost of producing refined petroleum products also falls. If marketers are able to buy fuel at lower international prices, consumers could benefit through reduced pump prices, although the adjustment may not happen immediately.

Industry experts, however, caution that Nigerians should not expect an instant reduction because local petrol prices are also influenced by the naira’s exchange rate, transportation costs, taxes and marketers’ existing inventories purchased at higher prices.

They note that marketers typically sell existing stock before adjusting prices to reflect lower replacement costs.

Market still watching Middle East Despite Monday’s sharp decline, analysts say uncertainty remains high as investors continue to monitor developments between the United States and Iran.

While hopes of diplomacy have eased fears of an immediate supply disruption, traders remain cautious because negotiations could still collapse, potentially reigniting tensions and sending oil prices higher again.

Another factor supporting lower prices is the decision by OPEC+ to gradually increase oil production from September. However, supply challenges in parts of the Middle East and other producing countries continue to limit the full impact of additional output.

For Nigeria, lower crude prices present mixed implications. Consumers could benefit from cheaper petrol if marketers pass on the savings, but reduced oil prices may also shrink government revenue since crude oil remains the country’s biggest source of foreign exchange earnings.

Whether Nigerians eventually enjoy cheaper fuel will depend on how long the decline in global oil prices lasts and whether other factors, particularly the exchange rate and distribution costs, remain stable.

Shell will continue to support Nigeria in its efforts to build a secure energy future through investments and efficient delivery of its businesses in Nigeria.

“We continue to invest in Nigeria’s future through our projects, our people, and our enduring confidence in the potential of this nation,” General Manager, Development and Subsurface Shell Nigeria Deepwater, Kun Jiang said today while delivering the sponsor’s remarks at the 49th edition of the Nigeria Annual International Conference and Exhibition of the Society of Petroleum Engineers in Lagos.

Kun highlighted current investments in Bonga North, HI and the advancement of Bonga Southwest as testimonies of Shell’s confidence in Nigeria’s deepwater future. The confidence was further reiterated with the recent launch of a US$3 billion contract financing programme by Shell Nigeria Exploration and Production Company (SNEPCo), which will help Nigerian contractors build capability, create value, and accelerate project delivery.

Shell is a major sponsor of the conference as part of a longstanding support for a professional body which has contributed to the development of the oil and gas industry. Discussing the theme of the conference; “Thriving in the Evolving Global Energy Landscape: Collaborative Growth and Resilience,” Kun said Nigeria had a lot of opportunities despite geopolitical tensions that threaten global supply chains and market volatility and shifting energy dynamics.

“With a population exceeding 240 million people, abundant natural resources, world-class talent, and growing domestic energy needs, Nigeria has all the ingredients to become one of the world’s most attractive energy investment destination,” she pointed out. “But potential alone does not create prosperity. Potential must be converted into progress. Resources must be transformed into value. Opportunity must be matched by action.”

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Nigeria must continue to attract capital, strengthen the business environment, embrace technology to unlock potentials if it will thrive in the global evolving energy landscape. She added: “The future will belong to countries and industries that combine resilience with innovation, ambition with collaboration and investment with execution excellence. Nigeria has the resources. Nigeria has the talent. Nigeria has the opportunity. What is required now is the collective determination to seize it.”

Shell is mounting an exhibition at the SPE conference with SNEPCo’s Senior Production Geologist Abidemi Belgore taking industry leaders and regulators round the stand.

Key areas of interest include technological breakthroughs that have enhanced output at Bonga and facilitated the execution of the Bonga North project. Also highlighted on the stand is the full range of Shell businesses in Nigeria from deepwater oil production and integrated gas to renewables and power solutions as well as social investments across the country.

The Nigerian naira recorded further gains against the United States dollar on Monday, appreciating to N1,408 per dollar in the parallel market, compared to N1,415/$ recorded at the close of trading last weekend.

The local currency also strengthened in the Nigerian Foreign Exchange Market (NFEM), where it appreciated to N1,365 per dollar, up from N1,368/$ at the end of last week.

According to data released by the Central Bank of Nigeria (CBN), the indicative exchange rate improved by N3, reflecting sustained appreciation of the naira in the official market.

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The latest gains also narrowed the gap between the parallel and official exchange rates to N43 per dollar, down from N47 per dollar recorded on Friday, indicating a gradual convergence between both markets.

Meanwhile, activity in the official foreign exchange market increased significantly, with interbank turnover surging by 132.3 per cent to N137.05 million, compared to N58.99 million recorded last weekend.

The improved performance of the naira across both markets comes amid continued efforts by monetary authorities to stabilise the foreign exchange market and enhance liquidity.