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

For the first time in four months, oil prices have fallen below $90 per barrel as US President Donald Trump signals a potential de-escalation of tensions with Iran. Brent, the benchmark for nearly 80% of global crude transactions, dropped to $89.70 per barrel in early European trading, a decline of 2.65% on the day. West Texas Intermediate (WTI), the US benchmark, also retreated by more than 2% to $84.78.

This marks a significant reversal from earlier this month when prices had surged above $115, driven by the nearly nine-month-long conflict between the US and Iran.

The market has been on edge since March, when the US and Israel expanded strikes on Iranian military and nuclear-related assets. Prices had skyrocketed from around $60 in January to as high as $130 in March/April, before easing in June/July and then spiking again to over $117 in late October as the war appeared entrenched. Last week, Brent experienced its worst week since the Covid lockdowns of 2020, shedding about 25% of its value from the October peak.

Trump's diplomatic efforts seem to be paying off, with reports suggesting momentum is building and Tehran is "talking very politely" with Western nations. Following meetings with Qatari Prime Minister Sheikh Mohammed bin Ab-dulrahman Al Thani, Trump stated that "momentum was building" and that "Tehran was 'talking very politely'."

He also mentioned that Qatar, Saudi Arabia, UAE, Bahrain, and Kuwait would "prefer the status quo", maintaining a naval blockade and a new interdiction task force to prevent advanced weapons movement. However, risks persist, as demonstrated when Yemen's Houthis struck Saudi Arabia's East-West pipeline, causing significant damage.

For Nigeria, which relies heavily on crude exports for foreign exchange earnings and federal revenue, the falling oil prices present a mixed signal. The 2026 budget is based on a price of $64.85 per barrel, and Nigeria's actual production of about 1.7 million barrels per day falls short of the 1.84 million bpd benchmark. While $89.70 per barrel is still $24.85 above the budgeted price, Nigeria continues to rely on higher prices to fund its Federation Account Allocation Committee (FAAC) disbursements, external reserves, and debt service.

At the same time, cheaper crude could lead to lower domestic pump prices, a politically sensitive issue since subsidy removal in 2023. Nigeria's petrol prices are largely based on international product prices plus freight, and recent surges have sparked public outcry due to the ongoing cost-of-living crisis.