Oil markets experienced a dramatic reversal on Wednesday, May 6, 2026, as hopes for a quick end to the U.S.-Iran conflict were dashed by Tehran’s creation of a new regulatory body for the Strait of Hormuz. West Texas Intermediate (WTI) crude futures for June delivery plunged to as low as $88.66 per barrel in early trading after President Donald Trump signaled a potential peace agreement. But prices skyrocketed later in the session, with WTI closing above $96 and Brent crude for July delivery surging past $103, as traders digested Iran’s unilateral move to assert control over the strategic waterway.
Key Takeaways
- Trump’s hint of ending “Operation Epic Fury” sent WTI to $88.66, but Tehran’s new Persian Gulf Strait Authority reversed gains.
- Iran’s new authority demands fees for Strait of Hormuz transit, contradicting U.S. conditions for free passage.
- The IRGC Navy will enforce new rules, pushing June WTI futures back above $96 and Brent above $103.
Trump’s Peace Hopes Trigger Initial Plunge
On Wednesday morning, President Trump posted on Truth Social that his administration was near a memorandum of understanding with Iran to terminate the military campaign known as “Epic Fury.” He stated: “Assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption, the already legendary Epic Fury will be at an end, and the highly effective Blockade will allow the Hormuz Strait to be OPEN TO ALL, including Iran.” The statement triggered a sharp sell-off in crude futures, with WTI hitting an intraday low of $88.66 and Brent sliding to $96.75. Traders priced in a rapid resolution that would restore free flow of oil through the Strait of Hormuz, which handles about 20% of global oil shipments.
Iran Creates Persian Gulf Strait Authority
Mid-morning, reports emerged that Iran had officially established the “Persian Gulf Strait Authority” to oversee maritime transit through the Strait of Hormuz. The authority’s website went live, indicating plans to collect fees for passage and to enforce rules set by the Iranian government. This move directly contradicted Washington’s demand for unconditional, fee-free navigation. The Islamic Revolutionary Guard Corps (IRGC) Navy Command released a statement: “With the end of threats from aggressors and under new procedures, safe and sustainable passage through the Strait will be possible.” The IRGC also thanked ship captains for their “cooperation in transiting the Strait of Hormuz in accordance with Iranian regulations,” suggesting that the authority was already operational and coordinating vessel movements.
Market Reversal: Oil Prices Surge
Investors quickly realized that Iran’s new authority effectively grants Tehran leverage over global oil transit, even in a post-conflict scenario. WTI futures for June delivery rebounded sharply, climbing above $96.20 per barrel by the close, while Brent July futures rose to $103.50. The volatility underscored the fragility of peace talks: while Trump touted a deal, Iran’s institutional maneuver signaled a desire to maintain control over the shipping lane. Analysts noted that the IRGC’s enforcement role adds a military dimension to the new regime, heightening risks for shippers and insurers.
Outlook: Heightened Volatility Ahead
With both sides far apart on core issues—free passage versus toll-based regulation—the market faces continued uncertainty. Trump’s “big assumption” now appears even more remote. Traders expect WTI to trade in a $90–$105 range in the near term, with any news regarding negotiations or Iran’s new rules likely to trigger sharp moves. The establishment of the Persian Gulf Strait Authority marks a strategic shift that could reshape global oil logistics long after the current conflict ends. All eyes are now on the Strait of Hormuz for signs of how the new authority will enforce its fees and rules, and whether Washington will respond with further sanctions or military measures.