Oil Price Falls Below $90 First Time in 4 Months as Trump Signals Iran De-escalation

• Development portends mixed fortunes for Nigeria

Emmanuel Addeh in Abuja

Nigeria’s crude benchmark, Brent, fell below the $90 per barrel threshold yesterday for the first time since August, as signs of a diplomatic opening between Washington and Tehran erased part of the war premium that had kept prices above $115 late last month.

Brent, the gauge for nearly 80 per cent of global crude transactions including Nigeria’s Bonny Light, Qua Iboe and Forcados grades, dropped to $89.70 per barrel in early European trading, down 2.65 per cent on the day. The US benchmark, West Texas Intermediate (WTI), also retreated by more than 2 per cent to $84.78.

It was the continuation of a sharp reversal. Brent had already slipped below $92 at the start of Asian trading after US Presi-dent Donald Trump told reporters he was not considering an attack on Iran “at this point” and that the nearly nine-month-old conflict could end “fairly soon”. WTI followed the same trajectory.

The market has been on edge since March when the US and Israel expanded strikes on Iranian military and alleged nuclear-linked assets. Prices surged from about $60 in January to as high as $130 in March/April, eased in June/July, then spiked again to over $117 in late October as the war appeared entrenched and shipping risks in the Strait of Hormuz mounted.

Last week, Brent plunged 17 per cent, its worst week since the Covid lockdowns of 2020. It has now shed about 25 per cent from that October peak.

The latest downward trend has been driven by diplomacy. Trump met Qatari Prime Minister Sheikh Mohammed bin Ab-dulrahman Al Thani at the White House on Monday. Afterwards he said momentum was building and Tehran was “talking very politely”.

In a Truth Social post, he added that Qatar, Saudi Arabia, UAE, Bahrain and Kuwait would “prefer the status quo”, maintaining a naval blockade and a new interdiction task force codenamed Operation Iron Gate to prevent advanced weapons movement.

However, risks remain as underlined days ago when Yemen’s Houthis again hit Saudi Arabia’s East-West pipeline, causing what the Saudi energy ministry called a “limited fire” that was extinguished. The group has sustained a campaign against Saudi energy assets since March.

For Nigeria, which earns more than 80 per cent of its foreign exchange and about half of federal revenue from crude, $90 oil is a mixed signal.

The 2026 budget is benchmarked at $64.85 per barrel and 1.84 million barrels per day, and an exchange rate of about N1,400/$. At $89.70, Brent is still $24.85 above budget, leaving a significant fiscal buffer.

However, with actual production averaging about 1.7 million bpd, against the 1.84 million bpd benchmark, Nigeria has con-tinued to rely on price rather than volume to fund its Federation Account Allocation Committee (FAAC) disbursements, exter-nal reserves and debt service.

On the flipside, cheaper crude could moderate domestic pump prices, a politically sensitive issue since subsidy removal in 2023. Petrol pricing in Nigeria is mostly anchored on international product prices plus freight.

In recent times, the pump price of the product has surged significantly across many states, often fluctuating between N1,390 and N1,450 per litre. This has sparked public outcry as citizens struggle to keep up with the attendant cost of living crisis.