Oil prices surged nearly 7% after U.S. President Donald Trump declared that the tentative ceasefire with Iran was over, raising the prospect of renewed conflict in a key energy-producing region. Brent crude futures spiked before paring some gains, while West Texas Intermediate also leaped.
Trump's Announcement and Military Strikes
Trump made the remarks during a NATO summit in Ankara, adding that he didn't want to deal with Iran anymore and later stated the U.S. would 'probably' strike Iran again that night. The comments came after U.S. forces completed strikes on more than 80 targets, following Iran's attacks on three merchant ships a day earlier. Those incidents—targeting a Qatari liquefied natural gas carrier and two large oil tankers—marked the biggest day of attacks since an interim peace deal took effect in June.
Impact on Global Energy Markets
Oil's rebound threatens fresh disruption for tense global energy markets, after futures had plunged in the second quarter as hostilities cooled. The renewed turmoil complicates decisions for shipowners and regional producers navigating the Strait of Hormuz, which links top OPEC producers in the Persian Gulf to global markets. 'Renewed tensions in the Middle East and concerns that the vessel attacks could drag lower oil exports from the Middle East are supporting prices,' said Giovanni Staunovo, a commodity analyst at UBS Group AG.
Ceasefire and Sanctions Waiver Revoked
Even during the ceasefire, there were significant tensions around the critical energy chokepoint. Iran insisted it controls the waterway and that transits without its permission aren't valid. Tehran told the UN's shipping watchdog on Tuesday that it has the right to control parts of the strait. Before the strikes, the U.S. Treasury revoked a sanctions waiver that had allowed Tehran to sell oil, reversing course on a key part of the interim peace deal. The agreement to lift sanctions on Iran saw millions of barrels of crude flood out of the Persian Gulf in recent weeks, much of which is now in limbo.
Market Positioning and Strait of Hormuz Traffic
The spike in futures comes against a backdrop of a market that had been wagering on lower prices. Speculators held a large short position in Brent futures and shed net-bullish wagers at the fastest pace since the pandemic in 2020 as Hormuz reopened. On Tuesday morning, a handful of oil carriers still appeared to be transiting Hormuz, though other ships turned around midway through crossing. Western naval forces warned of potentially lower traffic levels in the coming days and increased the threat level to merchant shipping from substantial to severe.
