Iran shuns US talks, oil prices face fresh pressure as Hormuz uncertainty deepens

Oil prices could climb again after Iran ruled out direct negotiations with the United States for now, reigniting fears over the reopening of the Strait of Hormuz. Iranian Foreign Minister Abbas Araghchi said on Sunday that Tehran will not return to talks until Washington addresses what Iran calls violations of an interim peace agreement.

The setback comes exactly a week after Brent crude had fallen by more than $16 per barrel in eight trading sessions, retreating sharply from the $100 level hit during the height of the latest Middle East conflict. That earlier decline had been driven by renewed peace efforts between Washington and Tehran, which eased worries about a prolonged disruption to global oil supplies through Hormuz.

What Iran is saying

Araghchi made clear that Iran is not currently negotiating directly with the United States. He said Washington must first resolve what Tehran considers violations of an earlier understanding. Messages are instead being passed through intermediaries, while Oman continues efforts to arrange safer movement of vessels through the strait.

“As long as the American violation of the Memorandum of Understanding continues and the US does not make amends for its violations, there is no possibility of resuming negotiations,” Araghchi was cited as saying by Iranian state television.

The Iranian position contrasts with comments from US Vice President JD Vance, who indicated that Washington believed progress had been made in negotiations, although he acknowledged uncertainty over whether Tehran would ultimately accept US conditions. Oman, which has been mediating, said its discussions with Iran were progressing in a positive and constructive atmosphere and called for restraint around the strait to create room for diplomacy.

Market moves and Iran's demands

Checks on Monday, August 3 showed West Texas Intermediate (WTI) crude opened 5.24% lower at $80.23 per barrel, while Brent fell to $83.86, extending a selloff that had erased most of the conflict-driven gains recorded in late July.

The latest uncertainty centres on what Iran is demanding before Hormuz can be fully reopened. Tehran’s demands include an end to US threats and military action, a permanent end to the war, the withdrawal of US naval and air forces from around Iran, compensation for war-related damages, the lifting of sanctions and the release of frozen Iranian assets.

Iran has also disputed Washington’s characterisation of the ongoing discussions as direct negotiations, saying intermediaries are currently carrying messages between the two sides.

What this means for Nigeria

A fresh increase in global crude prices would affect Nigeria, where oil prices influence government revenue and the cost of imported and locally distributed petroleum products. Despite the recent correction, crude prices remain significantly above Nigeria’s 2026 budget benchmark of $64.85 per barrel.

Sustained prices above that level could boost government oil revenues, especially if Nigeria maintains or increases production. But for consumers, the picture is less favourable. Since the Middle East conflict escalated, petrol prices have climbed from roughly N770 to N800 per litre at many filling stations to as high as N1,300 per litre in some locations, raising transport costs and adding to inflationary pressures.

A renewed surge in crude prices would risk pushing petrol prices and transport costs even higher, particularly if disruption around Hormuz persists.