Oil prices retreated sharply on Tuesday, May 6, after U.S. Defense Secretary Pete Hegseth confirmed that the American ceasefire with Iran remained intact, cooling investor fears of a return to full-scale conflict in the Middle East following a series of attacks on the United Arab Emirates.
International benchmark Brent crude futures dropped more than 2% to $111.45 per barrel by 9:17 a.m. ET, while U.S. West Texas Intermediate (WTI) futures shed over 3%, changing hands at $102.65 per barrel.
The pullback came after a turbulent Monday session that saw oil surge more than 4% as the fragile U.S.-Iran ceasefire appeared on the brink of collapse. Iran had launched a wave of drones and missiles at the UAE, and Washington confirmed it had sunk Iranian naval vessels in the strategically critical Strait of Hormuz — a chokepoint through which a significant share of the world’s oil supply flows.
Military Leaders Signal Restraint:
Despite the escalating incidents, senior U.S. military officials moved to temper alarm. General Dan Caine, Chairman of the Joint Chiefs of Staff, told reporters Tuesday that Iran’s provocations fell “below the threshold of restarting major combat operations at this point.” Hegseth was equally firm, stating plainly: “The ceasefire is not over.”
“Ultimately, the President is going to make a decision whether anything were to escalate into a violation of a ceasefire,” Hegseth said. “Right now, the ceasefire certainly holds — but we’re going to be watching very, very closely.”
In a pointed show of military resolve, the United States on Monday launched an operation to restore commercial shipping access through the Strait of Hormuz. Hegseth confirmed that two U.S.-flagged commercial vessels, escorted by American destroyers, transited the strait successfully.
“We know the Iranians are embarrassed by this fact,” the defense secretary said. “They said they control the strait. They do not.”
Danish shipping giant Maersk confirmed that one of its vessels, the U.S.-flagged Alliance Fairfax, made the crossing on Monday under U.S. military protection.
Trump Issues Stark Warning; Iran Calls for Diplomacy
Despite the relative de-escalation, rhetoric on both sides remained incendiary. President Donald Trump warned in a Fox News interview that Iran would be “blown off the face of the earth” if it targeted U.S. ships safeguarding commercial traffic through the strait.
Iranian Foreign Minister Abbas Araghchi pushed back through social media, arguing that recent events in the strait made clear
“there’s no military solution to a political crisis.” He urged Washington to resist being drawn back into conflict by what he called “ill-wishers,” adding a similar warning to the UAE.
Araghchi also noted that diplomatic talks were making progress through Pakistan’s mediation efforts — a signal that Tehran remains open to a negotiated resolution even as military incidents continue to mount.
U.S. Energy Secretary Warns No Guarantee Of Oil Price Relief Despite Reserve
Beyond the immediate geopolitical flashpoint, energy analysts are tracking a broader deterioration in global oil supply. Iraq, an OPEC member, is reportedly offering steep discounts to term buyers for crude loaded this month — though tankers must be prepared to navigate the Strait of Hormuz to take delivery, according to Bloomberg.
Analysts at one major bank warned that easily accessible buffers of refined products are being depleted at an accelerating pace, particularly petrochemical feedstocks such as naphtha and liquefied petroleum gas (LPG), as well as jet fuel.
Total global oil stocks — covering both crude and refined products held on land and at sea — currently stand at an estimated 101 days of demand, a figure that could slide to 98 days by the end of May. While that level remains above emergency thresholds, analysts cautioned that the headline figures obscure sharper shortages in specific regions and product categories, particularly where export restrictions are constraining supply flows.
Countries identified as facing elevated risks of product scarcity include South Africa, India, Thailand, and Taiwan — markets likely to feel the strain most acutely if the strait remains a flashpoint in the weeks ahead.