MW Oil prices bounce off lows as an Iran-war peace deal may be just a 'structured pause'
By Myra P. Saefong and Mike Murphy
Hopes grow that oil can again flow through Strait of Hormuz, but it could take a while before a 'resolution' is reached
In this picture obtained from Iran's ISNA news agency on Monday, vessels are seen anchored in the Strait of Hormuz off Bandar Abbas in southern Iran.
Global oil prices fell by as much as 12% Wednesday, then pared nearly half of those losses, as the market weighed reports of progress toward a U.S.-Iran peace deal and the potential impact on the growing crude supply crisis in the Persian Gulf.
"We've seen this movie before where the fragile truce fizzles faster than it forms," said Manish Raj, managing director at Velandera Energy Partners. "Today the market decided to sell, but tomorrow will be whole new day."
On Wednesday, Brent-oil futures for July delivery (BRNN26) fell by as much a 12% from Tuesday's settlement, to trade as low as $96.75 a barrel. They've since recouped some of those declines, to be down 6.5% at $102.76 in recent morning trading. June West Texas Intermediate crude (CLM26) was down 6.1% at $96.01.
In a post on Truth Social Wednesday, President Donald Trump said: "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."
An Iran deal at this point, however, would delay, not end, the world's supply crisis, analysts at Rystad Energy wrote in a note Wednesday.
"The possible peace framework as currently understood involves a moratorium on Iranian nuclear enrichment, sanctions relief, and a 30-day negotiating window, with a gradual reopening of the Strait of Hormuz phased over that same period," said Rystad's Chief Oil Analyst Paola Rodriguez-Masiu.
"This is not a resolution, it is a structured pause, a distinction that matters enormously for physical barrels," she said.
Even under an optimistic scenario involving a 30-day phased reopening of the Strait of Hormuz, at "meaningful volume recovery" wouldn't happen until June at the earliest, with processing port arrivals lagging by an additional four-to-six weeks after that," said Rodriguez-Masiu. "Transit insurance markets need to reprice, vessel operators need verified and sustained access, and commercial confidence cannot be rebuilt overnight."
"Global markets should not mistake a ceasefire headline for a supply headline," she said.
Trump, meanwhile, also said in his Truth Social post that if Iran doesn't agree to the terms of the deal, "the bombing starts, and it will be, sadly, at a much higher level and intensity than it was before."
The moves in oil Wednesday came as Axios reported the U.S. and Iran were drafting a one-page memo to end the war. The report, citing two U.S. officials and two other sources, said the memo would set a framework for more detailed nuclear negotiations.
Oil futures had already been down, but not nearly as much, on Trump's announcement of a pause to what's been called Project Freedom to allow for talks.
Read more: There's one reason why $200-a-barrel oil can't be entirely ruled out
Trump's pause matters "because the market interpreted it not as weakness, but as confirmation that diplomacy may finally be displacing escalation as the dominant macro driver," Stephen Innes, managing partner at SPI Asset Management, wrote in a note late Tuesday. "What makes this move particularly important is that the market was already structurally leaning bullish before the geopolitical temperature cooled."
The plan, which Trump announced Sunday and went into effect Monday, was intended to allow neutral shipping that's been bottled up in the Persian Gulf safely through the Strait of Hormuz, ostensibly with U.S. Navy protection. But the move tested the weeks-long cease-fire, with the U.S. reportedly sinking several Iranian boats Monday and Iran attacking U.S. forces, commercial ships and targets in the United Arab Emirates.
See more: This narrow shipping lane is how Trump now wants oil tankers to navigate the Strait of Hormuz
- Steve Goldstein contributed to this report
-Myra P. Saefong -Mike Murphy
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May 06, 2026 11:19 ET (15:19 GMT)
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