Oil prices tumbled on Tuesday as growing optimism over a possible diplomatic breakthrough between Iran and the United States triggered a sharp sell-off in global crude markets, with Brent sliding toward the $91 per barrel mark.

According to the Economic Times, Brent crude fell by over three per cent during intraday trading, while WTI dropped nearly four per cent, as markets reacted to reports that a draft Iran–US peace agreement had been submitted for review in Washington and described as “preliminarily acceptable”.

The development immediately weakened the geopolitical risk premium that had kept oil prices elevated in recent weeks, particularly following heightened tensions that disrupted sentiment around Middle East supply routes and the strategically critical Strait of Hormuz.

The strait, through which roughly 20 per cent of global crude shipments pass, had been a key focus for traders after earlier disruptions triggered a sharp rally that pushed oil prices above $120 per barrel in late February.

At the time, fears of prolonged supply shocks sent global energy markets into panic buying. Tuesday’s decline therefore marks a significant reversal, as traders began pricing in the possibility that easing geopolitical tensions could stabilise supply flows and reduce the likelihood of further disruptions.

Experts said the market is now reacting less to immediate supply concerns and more to expectations of diplomatic progress, although they warn that sentiment remains highly sensitive to any setback in negotiations.

Any breakdown in talks, they note, could quickly reverse the current price trend given the still-fragile security environment in the Gulf region.

The Economic Times notes that energy markets reacted swiftly to shifting geopolitical signals and easing fears over supply disruption.

Oil traders said the combination of easing geopolitical fears and shifting supply data continued to drive volatility in global crude markets.

In Nigeria, the Nigerian National Petroleum Company Limited recorded an over 70 per cent rise in revenue and profit. The Dangote Refinery also benefited from high fuel exports, but households are enduring higher fuel prices, raising inflation pressures.

However, the conflict involving Iran led to a sharp rise in fuel costs, impacting Nigeria’s inflation figures negatively. It is expected that a further crash in oil prices would translate to cheaper fuel for Nigerians.