Oil Rallies After Iran Creates Persian Gulf Strait Authority

Early Wednesday, West Texas Intermediate futures for June delivery dropped to $88.66 and Brent for July delivery fell to $96.75 after President Trump wrote on social media that the U.S. was nearing an agreement to end the current operation and lift a maritime blockade, prompting traders to price in eased disruptions to Hormuz shipping.

Mid-morning Tehran announced a state-backed Persian Gulf Strait Authority to oversee vessel transit through the Strait of Hormuz and launched a website that outlined possible fees and new transit rules. The authority thanked ship captains and operators for cooperating with Iranian regulations, language that suggests coordination with maritime operators under the new framework. The Islamic Revolutionary Guard Corps Navy Command declared that safe passage would be achievable “with the end of threats from aggressors and under new procedures,” and indicated it would enforce the new rules.

Traders pushed prices higher after the announcement: June WTI futures rose above $96 per barrel and July Brent climbed past $103. Market participants interpreted the authority’s proposed fees and Iran’s enforcement stance as potential complications for any U.S.-Iran memorandum of understanding, and reports said the IRGC Navy rejected U.S. terms and plans to apply the new regulations to vessels transiting the waterway.

The Strait of Hormuz is a major chokepoint for global energy flows, carrying roughly one-fifth of seaborne oil trade. Changes to rules of passage or the introduction of fees can affect shipping costs and supply expectations, contributing to volatility in oil futures.

Oil markets remained sensitive to diplomatic signals and military developments as talks between U.S. officials and Iranian authorities continued. Early reports of a memorandum of understanding briefly eased pressure on prices, while Iran’s establishment of the Persian Gulf Strait Authority and the IRGC’s enforcement intent prompted a rapid market rebound.