Dangote faces fresh pressure to slash petrol price as oil crashes on US-Iran peace deal

DANGOTE Petroleum Refinery is facing renewed pressure to further cut the petrol price as oil continues to decline due to the fresh US-Iran peace agreement achieved on Wednesday.

Oil crashed in early Asian trading on Thursday after the United States and Iran formally signed an agreement that paves the way for the reopening of the Strait of Hormuz. The development marks another sharp shift in market sentiment, coming as the International Energy Agency (IEA) warns of a potential global oil surplus despite current supply tightness.

Brent crude was trading at $77.84 per barrel at the time of reporting, representing a decline. U.S. benchmark West Texas Intermediate (WTI) also fell to $74.95 per barrel, Oilprice.com said.

The agreement, signed by the presidents of both countries, extends the existing ceasefire for an additional 60 days while negotiations continue toward a long-term settlement. Key provisions include reopening the Strait of Hormuz, lifting U.S. sanctions on Iran, releasing frozen Iranian assets, and commitments from Tehran not to pursue nuclear weapons.

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Speaking at the G7 summit, U.S. President Donald Trump warned that Washington would not hesitate to respond militarily if Iran breached the accord. “We’re going to bomb the hell out of them if they violate the agreement,” he said.

Oil markets have moved sharply in the opposite direction from earlier expectations. During the height of the conflict, analysts warned that crude prices could surge to as much as $200 per barrel as geopolitical tensions escalated. Instead, prices have fallen by more than 35 percent over the past month and continue to face downward pressure.

Market observers remain divided over the reasons behind the decline. Some argue that global energy markets have become more resilient to geopolitical disruptions, drawing comparisons with the sharp rise and subsequent decline in oil prices after Russia’s invasion of Ukraine. Others caution that investors may be overly confident that the current deal will guarantee the uninterrupted reopening of the Strait of Hormuz.

Data from Kpler suggest that more than 90 million barrels of non-Iranian crude, alongside roughly 70 million barrels of Iranian oil, are currently waiting to leave the Gulf region. The outlook is reflected in Dubai and Murban futures markets, where contracts have shifted into contango, indicating lower prices for immediate delivery compared with future deliveries.

Attention will now turn to how quickly crude exports resume, particularly Iranian shipments that are expected to return to international markets following the suspension of sanctions under the ceasefire arrangement.

Adding to the bearish sentiment, the IEA said on Wednesday that oil markets could face a substantial supply overhang by 2027 as production growth outpaces demand. The agency’s forecast contrasts sharply with OPEC’s outlook, which anticipates stronger growth in oil consumption next year.

While geopolitical tensions have eased considerably in recent weeks, risks have not disappeared entirely. Israel has distanced itself from aspects of the agreement relating to Lebanon and Hezbollah, highlighting the fragility of the broader regional situation.

The coming weeks will determine whether the ceasefire holds and how rapidly additional oil supplies reach global markets. Should the agreement unravel or another major supply disruption emerge, analysts suggest that markets may prove less capable of absorbing future shocks than they have during the latest crisis.

Dangote’s price cuts

Dangote Petroleum Refinery lowered the ex-gantry price of premium motor spirit (PMS), commonly known as petrol, on June 16 by N75 per litre, citing easing tensions in the Middle East and the resulting impact on global energy prices.

READ ALSO: Oil prices slump after Trump suggests Iran conflict may end soon

According to the notice, the refinery reviewed its PMS gantry and coastal prices following the de-escalation of geopolitical tensions in the Middle East, which had previously contributed to higher energy costs.

“Following the de-escalation of tensions in the Middle East, which has impacted energy prices, we wish to inform you that we have reviewed our premium motor spirit gantry/coastal price,” the circular stated.

The refinery announced the price adjustment in a circular issued to oil marketers on Monday. The new pricing took effect on June 16, 2026. Similarly, the coastal price per metric tonne had earlier been slashed from N1,595,790 to N1,495,215.

Dangote will now be expected to slash the petrol price to reflect the lowering global prices, analysts say.