Global oil prices fell by more than 1% early on Monday after US President Donald Trump announced an energy ceasefire between Russia and Ukraine, raising expectations of reduced disruptions to Russian fuel supplies.
As at the time of writing at 6:30 am (WAT), Brent crude futures declined by 1.34% to $103.30 per barrel, while West Texas Intermediate crude (WTI) futures had dropped by 1.71% to $90.28 per barrel.
The decline followed Trump’s weekend announcement that Russia and Ukraine had agreed to an immediate halt to attacks on energy infrastructure. However, neither Moscow nor Kyiv had confirmed the agreement, leaving uncertainty over whether it would translate into a sustained reduction in disruptions to oil and refined-product supplies.
According to a report, the prospect of fewer attacks on Russian energy infrastructure weighed on crude prices, while traders also took profits after oil recorded gains in the previous week. Ukrainian attacks on Russian refineries and shipping infrastructure had contributed to disruptions in global diesel supplies in recent weeks.
Trump also threatened Ukrainian President Volodymyr Zelensky to stop attacks on Russian refineries and announced a diesel supply deal with Russia on Friday, as fuel prices at the pump rose sharply. The proposed ceasefire could ease some supply concerns if implemented, although its impact will depend on whether both countries observe the arrangement.
However, the decline in oil prices remained limited by persistent geopolitical risks in the Middle East. Clashes between Saudi Arabia and Yemen’s Iran-backed Houthis continued, with the Houthis launching further attacks on Riyadh over the weekend, including on a major airport.
Tensions around the Strait of Hormuz also remained elevated after Iran described a recent US proposal to reopen the strategic waterway as “insufficient”. Attacks on shipping through the strait since late September have disrupted oil flows and heightened concerns over global supply security.
For oil-importing countries such as Nigeria, sustained movements in international crude and refined-product prices remain important to fuel procurement costs and domestic pump-price pressures. However, the impact on Nigerian fuel prices will also depend on exchange-rate movements, freight, insurance, landing costs and local refinery pricing.
The market’s next direction will depend partly on whether the Russia-Ukraine energy ceasefire is confirmed and implemented, while developments in the Middle East and the security of shipping through the Strait of Hormuz continue to pose risks to global supply.