Oil prices extended their decline early Monday, with Brent crude falling towards $100 per barrel as expectations of renewed diplomatic efforts to end the US-Iran war reduced some of the geopolitical risk premium built into the market.
As at the time of writing, 03:48 am (WAT), Brent crude was trading at $101.70 per barrel, down 2.09%, while WTI stood at $98.00 per barrel, down 2.29%. Both benchmarks have now fallen to their lowest levels since September 10, according to Reuters.
The latest decline adds to a sharp weekly sell-off, with the two benchmarks coming under sustained pressure as traders assess the prospect of a diplomatic opening between Washington and Tehran. Brent settled 0.91% lower on Friday, while WTI fell 1.58%.
The immediate catalyst is the possibility of renewed US-Iran engagement during this week’s United Nations General Assembly. US President Donald Trump said he was open to meeting Iranian President Masoud Pezeshkian, who is expected in New York, while Iran has reportedly conveyed conditions to mediators for re-engaging in negotiations.
Despite the softer crude market, physical supply risks across the Middle East remain significant. Yemen’s Iran-backed Houthis said they attacked sensitive sites in Riyadh and an Aramco facility in Yanbu, while Saudi Arabia continues to deal with disruptions to its East-West pipeline.
Saudi Aramco has responded by increasing crude exports through the Strait of Hormuz, particularly after halting some shipments through Yanbu. According to provisional Kpler data cited by Reuters, Saudi exports have recovered to more than 4 million barrels per day in September, compared with 2.4 million bpd in August.
The shift in Saudi export flows is significant for the global physical market. JPMorgan analysts said Middle East oil flows averaged 17.1 million bpd over the past 10 days, while satellite data showed Saudi crude flows through Hormuz averaging 2.9 million bpd over the past six days, up sharply from about 700,000 bpd in August.
For Nigeria’s downstream market, the sharp reversal in international crude prices is important for petrol and diesel replacement economics. A sustained decline in Brent can ease import-parity and landing-cost pressure, although the effect on Nigerian depot prices will depend on crude prices, product premiums, freight, insurance, exchange rates and existing inventory costs.
The market is therefore balancing two opposing signals: diplomatic expectations are reducing part of the geopolitical premium, while continued attacks and disrupted Saudi infrastructure are keeping physical supply risks elevated.
With Brent now at $101.70 per barrel and WTI at $98.00, traders are watching whether the renewed diplomatic push can translate into a sustained reduction in Middle East supply risk, particularly as Saudi Arabia continues to reroute crude exports through Hormuz.