International crude oil markets experienced a sharp roller-coaster session on Wednesday, with both major benchmarks recovering from an early-morning slump after President Trump reiterated that his administration was nearing a peace deal with Iran. The trigger? Iran's sudden establishment of a new "Persian Gulf Strait Authority" tasked with overseeing traffic through the Strait of Hormuz.
Trump's Optimistic Signal Sends Oil Lower
Early Wednesday, oil prices plunged on reports that a memorandum of understanding could end "Operation Epic Fury." Trump posted on Truth Social that "assuming Iran agrees to give what has been agreed upon, which is perhaps a big assumption, the already legendary Epic Fury will end and the very effective blockade will allow the Strait of Hormuz to open for all, including Iran." This drove West Texas Intermediate (WTI) futures for June delivery down to $88.66 per barrel, while Brent crude for July fell to $96.75 per barrel.
However, pessimism re-emerged as Iran established the "Persian Gulf Strait Authority" to monitor maritime traffic through the Strait of Hormuz. The authority's new website indicated it would collect tolls for passage and enforce regulations set by the current Iranian government, directly contradicting Washington's terms for ending the conflict and lifting the naval blockade against Iran.
Iran's Hardline Stance Drives Rebound
The Islamic Revolutionary Guard Corps (IRGC) Navy command thanked vessel captains and operators for "cooperation in passing through the Strait of Hormuz in accordance with Iranian regulations," signaling that the authority is already coordinating safe passage. "With the end of aggressor threats and the establishment of new procedures, passage through the strait will be safe and sustainable," the IRGC statement read.
Following this development, oil prices reversed sharply. WTI futures for June delivery surged above $96 per barrel, and Brent crude for July delivery climbed above $103 per barrel. The market repriced geopolitical risk as traders realized that Iran is now aiming to monetize its strategic chokehold rather than simply lift the blockade.
The key issue remains whether the U.S. will accept Iran's new demands or escalate military pressure. With both sides digging in, the Strait of Hormuz — through which about one-third of global seaborne oil passes — is likely to remain a flashpoint, keeping oil prices highly volatile in the near term.