Fuel price to settle below N1000/litre as U.S.-Iran deal paves way for Strait of Hormuz reopening

OIL prices fell sharply in Asian trading on Monday after the United States and Iran announced an agreement that would allow the reopening of the Strait of Hormuz, ending more than 100 days of disruption to one of the world’s most important energy shipping routes.

At the time of reporting, Brent crude was down by nearly 4 percent at $83.67 per barrel, while U.S. benchmark West Texas Intermediate (WTI) declined to $80.76 per barrel. The latest drop extends a downward trend that has emerged in recent weeks amid growing speculation that a diplomatic breakthrough was imminent despite continued military escalations.

As a result, the petrol price is seen falling below N1000 per litre after many weeks of inflated prices at filling stations across Nigeria. Analysts say the price will likely settle between N850 and N915 when the Strait finally re-opens and ships begin ferrying fuel supplies, easing pressure on the domestic market while helping to stabilise costs.

READ ALSO: Strait of Hormuz traffic stalls again as Iran opens fire on passing ships

The breakthrough was announced on Sunday night when President Trump stated on social media that negotiations with Iran had been concluded. He said oil would once again move through the Strait of Hormuz once the agreement is formally signed on Friday.

Iran also signaled its approval of the arrangement. Deputy Foreign Minister Kazem Gharibabadi confirmed that both sides had finalised the text of a memorandum of understanding, adding that a formal signing ceremony is scheduled to take place in Switzerland later this week.

The agreement was further validated by Pakistan and Qatar, which served as the principal mediators throughout the negotiations.

Although the full terms have not been officially released, Iran’s semi-official Mehr News Agency, citing a source close to the country’s negotiating team, reported that the deal includes an end to the conflict in Lebanon, the suspension of sanctions on Iranian oil exports, the release of $24 billion in frozen Iranian assets, and assurances that Iran will not pursue nuclear weapons.

According to the report, sanctions relief and the release of frozen funds will occur during a ceasefire period. Mehr also indicated that Iran could gain access to $12 billion before broader negotiations commence.

For energy markets, one of the most significant provisions is the resumption of Iranian crude exports during the proposed 60-day ceasefire while talks on nuclear issues continue.

The diplomatic progress nearly unravelled shortly before the announcement after Israel launched an air strike in southern Beirut. Trump criticised the operation, saying it “should not have happened,” and subsequently urged all parties to de-escalate. He also called for an immediate halt to Israeli attacks across Lebanon.

READ ALSO: Iraq engages Iran over Strait of Hormuz oil passage

Despite optimism surrounding the agreement, market participants remain cautious. Traders are expected to closely monitor the removal of mines from the Strait of Hormuz, the formal signing of the accord, and the restoration of normal shipping activity before fully embracing expectations of supply normalisation.

After more than three months of conflict, investors are increasingly pricing in the prospect of peace and a gradual return to stability in global oil markets. However, questions remain over the durability of the agreement and how quickly normal trade flows can be restored.