The two international crude benchmarks recovered after falling hard in the early morning when President Trump reiterated that his Administration was nearing a peace agreement with Iran. The catalyst? The alleged establishment of the “Persian Gulf Strait Authority” to oversee Hormuz’s transit.
Key Takeaways:
Trump’s hopes to end Epic Fury dropped WTI to $88.66, but future deals face hurdles from Iran’s new demands.Iran’s new Persian Gulf Strait Authority threatens US talks by demanding a fee for future Hormuz transits.Rejecting US terms, the IRGC Navy will enforce new transit rules, pushing June WTI futures back above $96.On Wednesday morning, reports of a possible termination of “Operation Epic Fury” derived from an agreement centered on a memorandum of understanding prompted oil prices to drop substantially, with West Texas Intermediate (WTI) futures reaching as low as $88.66 and their Brent equivalents for July delivery dropping to $96.75.
The authority’s new website hints at the collection of fees for this passage and the establishment of rules issued by the current Iranian government, a point that differs from Washington’s conditions to end the conflict and the maritime blockade against Iran.
Regarding the authority’s operation, the Iranian regime thanked ship captains and operators for their “cooperation in transiting the Strait of Hormuz in accordance with Iranian regulations,” suggesting that the entity is already coordinating safe passage for vessels.
“With the end of threats from aggressors and under new procedures, safe and sustainable passage through the Strait will be possible,” the Islamic Revolutionary Guard Corps (IRGC) Navy Command declared.
Oil prices bounced after these events. WTI futures with June delivery rose to over $96, and Brent futures with July delivery reached over $103 per barrel.
