Global oil prices extended their decline for a fourth consecutive trading session on Thursday, with Brent crude falling below $73 a barrel and West Texas Intermediate (WTI) slipping below $70, as improving prospects for a lasting U.S.-Iran peace agreement eased concerns over supply disruptions.
The latest selloff has erased nearly all the gains recorded since tensions escalated in the Middle East, with traders increasingly turning their attention from geopolitical risks to expectations of a global oil surplus in 2026.
The Numbers Tell the Story
Brent crude traded below $73 per barrel, while WTI fell below $70 per barrel, extending losses for a fourth straight session.
The decline marks a sharp reversal from early May, when Brent briefly traded above $113 per barrel amid fears that conflict in the Middle East could disrupt global oil supplies.
Market sentiment has since shifted as confidence grows that diplomatic efforts between the United States and Iran could help stabilize crude exports from the region.
Why Oil Prices Are Falling
Improving peace prospects have encouraged more oil tankers to resume normal operations through the Strait of Hormuz, one of the world’s busiest energy shipping routes.
Saudi Arabian tankers are reportedly returning to the Ras Tanura export terminal to resume Persian Gulf shipments, while a temporary U.S. waiver allowing purchases of already-loaded Iranian crude is expected to increase global supply.
With oil flows through the Strait of Hormuz recovering, traders are once again focusing on market fundamentals rather than geopolitical disruptions.
Attention is also turning to forecasts of a global supply surplus in 2026, adding further downward pressure on prices.
The changing outlook has intensified debates within OPEC, with Iraq reportedly warning it could reconsider its membership if production quotas are not adjusted to reflect market realities.
What It Means for Nigeria
Though crude price plunges, it is still comfortably above Nigeria’s 2026 budget benchmark of $64.85 per barrel. At current levels below $73, the market still offers a cushion of about $8 per barrel above the fiscal assumption, suggesting the immediate impact on public finances may be limited if prices stabilize around current levels.
Nigeria’s flagship crude grades, including Bonny Light, Qua Iboe and Forcados, generally track Brent crude. A sustained fall toward or below the budget benchmark, however, would increase pressure on oil revenue, external reserves and foreign exchange earnings.
Meanwhile, U.S. crude inventories at the Cushing, Oklahoma, storage hub remain near operational minimum levels at around 19 million barrels, indicating that supply conditions remain relatively tight and could keep price volatility elevated.
What Markets Are Watching
Investors are now closely monitoring developments in the U.S.-Iran peace process, shipping activity through the Strait of Hormuz and upcoming OPEC production decisions.
The pace of Iranian crude returning to international markets and demand growth in major consuming economies will also play a key role in determining whether the anticipated 2026 supply surplus materializes.
BuyerMetrics Bottom Line
The oil market has largely moved beyond pricing the immediate risks of conflict in the Middle East and is once again focusing on supply fundamentals. If diplomatic progress continues and additional barrels return to the market, crude prices could remain under pressure. For Nigeria, that would reinforce the need to strengthen non-oil exports and diversify revenue sources as global energy markets enter a new phase of uncertainty.
