Oil prices surged more than 5% on Wednesday after President Trump declared the interim ceasefire agreement with Iran “over”, renewing fears of disruptions to Middle East oil supplies and halting a weeks-long decline in oil prices.
Brent crude futures jumped $3.82, or 5.15%, to hit $77.98 a barrel at 0832 GMT, while U.S. West Texas Intermediate crude climbed $3.70, or 5.25%, to $74.14 a barrel, according to Reuters. Both benchmarks reached their highest levels since June 23, reversing a slide that had seen prices return to pre-war levels after the memorandum of understanding was signed on June 17.
Trump’s announcement came after the U.S. launched a wave of strikes on Iran in response to Iranian attacks on three commercial vessels transiting the Strait of Hormuz. The U.S. Department of the Treasury simultaneously revoked its 60-day waiver on sanctions on Iranian oil, effective July 17, according to Al Jazeera and Reuters.
The June 17 memorandum of understanding, signed remotely by Trump and Iranian President Masoud Pezeshkian, had included a 14-point framework to manage the conflict and set a 60-day window for negotiating a final agreement. The deal called for the U.S. to remove its naval blockade of Iranian harbors within 30 days, while Iran committed to restoring traffic through the Strait of Hormuz, according to Chatham House.
The latest escalation threatens to reignite supply concerns that had eased after the ceasefire. When the MoU was announced in June, oil prices tumbled as traders anticipated a wave of pent-up Middle East supply coming onto the market. Many had built large short positions betting prices would fall further, according to Reuters reporting.
Iran’s Revolutionary Guards said they targeted U.S. military sites in Bahrain and Kuwait early Wednesday in response to the American strikes. Iran did not directly claim responsibility for the vessel attacks but has repeatedly warned shipping against transiting routes it has not approved, according to Al Jazeera.
Bjarne Schieldrop, chief commodities analyst at SEB, told Reuters that the latest developments have thrown the future of the 60-day negotiation process into doubt. “In my view, a price closer to $80 a barrel is more consistent with current market fundamentals than $70,” he said.
The Strait of Hormuz carries cargoes equal to about one-fifth of global oil supply. Since the start of the conflict in late February 2026, nations have drawn down their inventories to make up for supply shortfalls caused by the closure, according to Reuters. Saul Kavonic, head of energy research at MST Financial, told Al Jazeera that Iran intends to cement its control over the strait in coming weeks, a move unacceptable to the U.S. and many Gulf states, which could result in passage remaining below 50% of pre-war levels for many months with periodic flare-ups.
Sources
- Reuters — Oil price surge to $77.98 per barrel, Trump’s statement on Iran ceasefire being “over”, U.S. revocation of Iranian oil sales license, and analyst commentary on market fundamentals
- Al Jazeera — Brent crude rising above $76 per barrel, U.S. strikes on Iran, revocation of the 60-day waiver on Iranian oil sanctions, and analyst perspectives on Strait of Hormuz control
- Chatham House — Details of the June 17 memorandum of understanding, including the U.S. commitment to remove its naval blockade within 30 days and Iran’s commitment to restore Strait of Hormuz traffic
