Global oil prices continued their downward trend on Monday, with Brent Crude opening at $91.12 per barrel and West Texas Intermediate (WTI) opening at $87.36 per barrel.
The market has come under sustained pressure amid easing geopolitical tensions and growing optimism over an extended ceasefire between the United States and Iran.
Oil prices began May at approximately $118 per barrel and remained volatile through the middle of the month as tensions in the Middle East pushed Brent crude above $110 per barrel. However, prices fell sharply during the final weeks of May, with Brent closing the month around $91 per barrel, representing a decline of about 23 percent from its opening level.
Market data showed that oil prices were on track to record a 19 percent decline for May, marking the steepest monthly fall since 2020. The drop comes as traders increasingly bet on an extended ceasefire and the possibility of a broader agreement between Washington and Tehran despite recent disruptions to global supply chains.
Economic analysts have warned that such price swings could have significant implications for Nigeria's economy, particularly given the country's heavy dependence on crude oil exports.
According to experts, higher oil prices typically boost government revenues, strengthen foreign reserves, and improve fiscal buffers, enabling greater spending on infrastructure and social programmes. Conversely, lower prices place pressure on public finances, often forcing governments to cut expenditure, delay projects, or increase borrowing.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, noted that declining oil prices could also affect foreign exchange earnings and put pressure on the naira.
At the close of trading last week, Brent crude futures traded at $93.84 per barrel, while WTI crude settled at $88.94 per barrel.
The sharp decline in May followed a historic rally in April, when oil prices surged amid severe supply disruptions and pushed average U.S. gasoline prices above $4 per gallon.
Last week, Brent crude fell below the $100 per barrel mark as market sentiment improved on reports that the United States and Iran may be moving closer to a peace agreement. Investors are also watching negotiations surrounding a reported 60-day extension of the ceasefire and efforts to reopen the Strait of Hormuz, a key global oil and gas shipping route that has faced significant disruptions in recent months.
Although reports of a potential peace deal continue to circulate, both countries have maintained their respective negotiating positions, leaving the outcome uncertain.
For Nigeria, fluctuations in global oil prices have direct consequences because the country relies heavily on crude exports while importing refined petroleum products. Changes in international prices often influence domestic fuel costs and market supply.
In response to changing market conditions, Dangote Refinery recently reduced its ex-gantry prices for petrol and diesel, lowering petrol from ₦1,275 per litre to ₦1,250 per litre and diesel from ₦1,800 per litre to ₦1,700 per litre.
The impact of oil price movements remains substantial, as the petroleum sector accounts for about 70 percent of government revenue and more than 90 percent of Nigeria's foreign exchange earnings.
Speaking on the broader economic implications, Yusuf said:
“A weakened Naira makes imports costlier, fluctuating oil prices frequently trigger inflationary pressures that erode consumer purchasing power. And because oil forms the backbone of Nigeria’s gross domestic product, plummeting oil prices have historically plunged the country into economic challenges especially as it impacts her revenue, while stable or high prices spur periods of revenue boom for government,” he argued.
Yusuf also highlighted the strong performance of Nigeria's refining sector, particularly in the first quarter of 2026, when the sector recorded growth of 37.46 percent, the highest of any segment of the economy.
According to him:
“The impressive growth trajectory was also likely supported by elevated regional and global demand for locally refined petroleum products amid persistent geopolitical tensions in the Middle East and the resultant disruptions within the global energy market. The exceptional performance of the sector was driven largely by the operations of the Dangote Refinery, whose emergence is increasingly reshaping Nigeria’s energy ecosystem, strengthening domestic value addition and reducing the economy’s dependence on imported petroleum products,” Dr. Yusuf noted, adding that the remarkable performance underscores the transformative potential of domestic refining in advancing energy security, deepening import substitution, accelerating industrialisation and conserving foreign exchange.
The CPPE chief maintained that the sector's growth demonstrates the strategic importance of domestic refining capacity in strengthening Nigeria's energy security, reducing import dependence, promoting industrialisation, and preserving foreign exchange reserves.