Global oil prices, including Nigeria’s Bonny Light crude, fell sharply below $95 per barrel on Wednesday following a ceasefire agreement between the United States and Iran, easing fears of prolonged supply disruptions.
The decline comes after Iran agreed to reopen the Strait of Hormuz, a critical route for about 20 per cent of global energy supply, for two weeks as part of a temporary truce with the U.S.
Benchmark crudes, Brent and WTI, dropped by more than 15%, reversing earlier gains driven by escalating tensions in the Middle East.
The breakthrough followed an announcement by U.S. President Donald Trump, who confirmed a two-week suspension of military action in exchange for Iran guaranteeing safe passage through the Strait of Hormuz.
Iran’s Foreign Minister, Abbas Araghchi, said Tehran would ensure coordinated and secure transit through the strait, while halting defensive operations during the ceasefire period.
The agreement is expected to pave the way for broader negotiations aimed at ending the six-week conflict, which has disrupted global energy markets and heightened geopolitical risks.
Pakistan, led by Prime Minister Shehbaz Sharif, played a key mediating role, urging both sides to allow diplomacy to take precedence and pushing for a temporary reopening of the strategic waterway.
Talks between U.S. and Iranian officials are expected to begin in Islamabad, with both sides reportedly considering a broader framework for a lasting ceasefire.
There are also indications that Israel has signalled support for the truce, although reports of continued hostilities shortly after the announcement have raised uncertainty about the timing and durability of the ceasefire.
The reopening of the Strait of Hormuz has significantly reduced immediate supply risks, triggering a sharp correction in oil prices after weeks of volatility.
The development marks a shift in market sentiment, with traders now cautiously optimistic that sustained diplomatic engagement could stabilise global energy markets in the near term.
