Oil Prices Drop 14% as Bonny Light Falls to $94.41 on US-Iran Ceasefire

Oil Prices Drop 14% as Bonny Light Falls to $94.41 on US-Iran Ceasefire

The price of Nigeria’s Bonny Light crude has plunged by 14.2 per cent to $94.41 per barrel, down from $110 per barrel recorded earlier in the week, following the announcement of a two-week ceasefire by Donald Trump between the United States and Iran.

The sharp decline reflects easing geopolitical tensions in the Middle East after Iran signalled readiness to guarantee safe passage for oil tankers through the Strait of Hormuz, a critical corridor that handles a significant share of global crude shipments. The development has reduced fears of supply disruptions that had previously driven oil prices above the $100 mark.

Global benchmarks also recorded notable declines, with Brent crude falling to about $94 per barrel from around $100, while West Texas Intermediate (WTI) dropped significantly as traders reacted to improved supply outlook and reduced risk premiums. Market analysts describe the trend as a “geopolitical relief drop”, driven by renewed confidence in oil supply stability.

In addition, reports indicate that the United States has relaxed sanctions on Iranian and Russian oil exports, allowing more crude to flow into the global market. This move has further contributed to downward pressure on prices by increasing supply at a time when demand growth remains moderate.

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Further weighing on prices, the U.S. Energy Information Administration (EIA) reported a 3.1 million barrel increase in crude oil inventories, bringing total commercial stockpiles to 464.7 million barrels, about two per cent above the five-year seasonal average. The rise in inventories signals ample supply in the market, reinforcing bearish sentiment among traders.

Speaking on the development, the Chief Executive Officer of PetroleumPrice.ng, Olatide Jeremiah, said the drop in crude prices is expected to reduce operational costs for refiners globally. According to him, if the trend persists, it could lead to lower prices of refined petroleum products, including Premium Motor Spirit (PMS), offering relief to motorists and transport operators facing high fuel and transportation costs.

“The drop in crude oil prices will reduce the cost of operations for refiners worldwide. If sustained, consumers should expect lower fuel prices,” he said.

However, he cautioned that Nigeria’s government revenue may decline due to lower oil prices, given the country’s reliance on crude exports. He noted, though, that the impact may be limited since the 2026 budget benchmark of $64.85 per barrel remains well below current market prices.

Nigeria’s 2026 fiscal framework is based on 1.84 million barrels per day production, an oil price benchmark of $64.85 per barrel, and an exchange rate of ₦1,400 to the US dollar, suggesting that the current price level still provides a buffer above budget projections.

Analysts say while the current drop offers short-term relief for consumers and energy markets, the outlook remains uncertain, as oil prices could rebound if geopolitical tensions resurface or if the ceasefire agreement collapses.

Oil Prices Drop 14% as Bonny Light Falls to $94.41 on US-Iran Ceasefire