Crude oil prices tumbled on Wednesday, with Nigerian grades falling below $95 per barrel after Iran agreed to reopen the Strait of Hormuz as part of a temporary ceasefire deal with the United States.
The severe plunge came after Donald Trump confirmed that Tehran would be permitted to pass safely and coordinate via the crucial shipping route, thereby suspending further military activity for two weeks.
Managing around one-fifth of the world’s energy supply, the Strait of Hormuz is a significant trigger for price increases in the event of any disturbance.
Following gains from weeks of increased tensions in the Middle East, Brent and WTI crude benchmarks fell more than 15 percent. Along with Bonny Light, other Nigerian crude blends lost ground as traders quickly responded to indicators of reducing political risk.
The News Chronicle gathered that the rapid price correction is evidence of increased faith in global supply stability, as the opening of the Strait lowers concerns about drawn-out disruptions that had previously driven oil markets higher.
Analysts say the two-week window will be closely watched for signs of a broader, longer-lasting agreement.
Foreign Minister Abbas Araghchi clarified Iran’s stance by noting that secure passage would be ensured if attacks on Iran stopped.
Pakistan, under Prime Minister Shehbaz Sharif, meanwhile, has helped both parties return to the negotiating table through mediation initiatives.
As negotiations are expected to start shortly, market focus is now on whether diplomacy may provide a longer-term resolution and stabilize energy prices.
