Oil Prices Spike as US Strikes Iran and Ceasefire Appears to Collapse

A Fragile Peace Shattered

A ceasefire that had briefly calmed one of the world's most critical oil corridors is now in serious jeopardy — and global energy markets are feeling it immediately. Oil prices surged on Wednesday after President Donald Trump threatened to bomb Iran for a second day and reimpose the U.S. naval blockade, in retaliation for attacks on tankers transiting the Strait of Hormuz. West Texas Intermediate futures rose 4.4% to close at $73.52 per barrel, while Brent futures, the international benchmark, jumped 5.2% to settle at $78.02.

The United States military launched a new round of strikes against Iran on July 7 in retaliation for attacks on three vessels in the Strait of Hormuz that American officials described as a ceasefire violation. The Al Rekayyat was struck by a projectile, causing a fire but no casualties, while two other vessels were also attacked — one by a projectile and another by a drone. Speaking at the NATO summit in Turkey, Trump said he considered the ceasefire with Iran over, and his comments came after the U.S. had already bombed the Islamic Republic overnight.

Sanctions Back, Oil Exports Blocked

The price jump came after the U.S. launched strikes on Iran and revoked a temporary waiver of sanctions on Iranian oil, following the attacks on three commercial vessels in the Strait of Hormuz. The Treasury Department had last month authorized the sale of Iranian oil until August 21 as part of broader negotiations with Tehran, but transactions will now no longer be allowed after 12:01 a.m. EDT on July 17. The new order also rescinds authorization for any new transactions, including purchases or loading, after Tuesday.

Iran's foreign ministry labeled the strikes a "gross violation of the Memorandum of Understanding" Washington and Tehran reached last month to bring the conflict to an end. Tehran also said it had targeted 85 U.S. military sites in Bahrain and Kuwait in response to what it described as U.S. violations of the ceasefire. The tit-for-tat escalation has thrown months of painstaking diplomacy into doubt.

Why the Strait of Hormuz Matters So Much

The two sides have continued to battle over the strait, which carried 20% of the world's oil before the war, creating ongoing uncertainty around a vital shipping route. The renewed conflict raised the prospect of fresh disruptions to global energy supplies by deterring shipowners and regional producers from using the vital waterway — a sharp reversal from earlier expectations of a supply glut, after OPEC+ increased production quotas and Middle Eastern producers moved to ramp up output.

Shipping had picked up significantly in the strait since the U.S. and Iran signed the memorandum, but traffic was still well below prewar levels, and recent attacks on the waterway are likely to deter commercial shipping companies further. The U.S.-led Joint Maritime Information Center increased its threat assessment for ships transiting the waterway to "severe," warning that further hostile action by Iran was likely.

What Comes Next for Energy Markets

Prices eased off session highs after Trump later said he did not believe Iran and the U.S. would return to full-scale war, stating, "I don't think it's going to start again." But analysts aren't so sanguine. Saul Kavonic, head of energy research at MST Marquee, said he expects oil prices to remain elevated as hazardous conditions persist in the strait and the release of emergency oil stockpiles winds down.

On June 17, U.S. and Iranian presidents signed a memorandum of understanding intended to bring the conflict to a formal end within 60 days. That window is now at serious risk of closing without resolution. With sanctions reimposed, tankers under fire, and a president declaring the ceasefire "over" from a NATO stage, the world's most important oil chokepoint remains as volatile as ever — and drivers, manufacturers, and economies everywhere will be watching the price boards closely.