West Texas Intermediate crude for July delivery dropped as much as 5.35 U.S. dollars, or 5.53 percent, to 91.25 dollars per barrel at one point. Brent crude for July delivery sank 5.57 dollars, or 5.38 percent, to 97.97 dollars a barrel at the low point.
U.S. President Donald Trump announced Saturday that a peace agreement with Iran has been “largely negotiated,” subject to finalization between the United States, Iran and other relevant countries in the Middle East.
A proposed agreement the United States and Iran are close to signing involves a 60-day ceasefire extension, during which the Strait of Hormuz would be reopened, Iran would be able to freely sell oil, and negotiations would be held on curbing Iran’s nuclear program, Axios quoted a U.S. official as saying on Saturday.
U.S. Secretary of State Marco Rubio said the United States was prepared to enter “into very serious talks” about Iran’s nuclear program if Iran reopened the Strait of Hormuz, The New York Times reported on Sunday.
Meanwhile, the Navy of Iran’s Islamic Revolution Guard Corps (IRGC) on Sunday said 33 vessels had passed through the Strait of Hormuz within the past 24 hours in coordination with and after obtaining permission from its forces.
Regional pump prices
Despite the sudden drop in global futures, the economic shockwaves of the Middle East energy crisis continue to hit consumers across the East African Community (EAC), where local regulated pump prices reflect weeks of severe supply constraints. Because local pricing cycles lag behind the wholesale market, the immediate relief on global exchanges has yet to trickle down to regional consumers.
In Rwanda, regulated fuel prices remain at historic highs following mid-April tariff revisions by the Rwanda Utilities Regulatory Authority (RURA). Petrol currently retails at Rwf 2,938 per litre, a steep climb from the Rwf 2,303 per litre seen earlier in the first quarter, while diesel stands at Rwf 2,205 per litre.
In Kenya, the fiscal strain of funding fuel subsidies forced the government to pass a 23.5% diesel price hike on to consumers in the May pricing cycle. This triggered a massive nationwide public transport strike led by matatu operators and widespread protests that paralysed Nairobi and major trade corridors. The unrest resulted in four deaths and more than 700 arrests before the Ministry of Interior secured a temporary one-week pause on the strike to initiate stakeholder negotiations.
Still, Hamad Hussain, a commodities economist at Capital Economics, warned that it would be hard for energy supplies to go back quickly to the level prior to the start of the war on Iran due to damage to facilities, halted oil production and broader obstacles to shipping through the Strait of Hormuz.
Oil prices will stay elevated for some time and would only start to trend lower as and when the supply-demand balance in the oil market materially improves, which is likely to be well into 2027, said Hussain. For oil-import dependent nations across East Africa, this points to a prolonged period of high inflation and intense pressure on national foreign exchange reserves.
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