Oil prices surged over 7% to a two-week high on Wednesday after U.S. President Donald Trump declared that the interim ceasefire agreement with Iran is officially over and dismissed the recently signed memorandum of understanding as a “waste of time.” Brent crude for September delivery spiked 7.6% to trade at $79.76 per barrel at 10:40 am ET, while WTI crude for August delivery gained 7.2% to change hands at $75.4/bbl.
Iran attacked three commercial vessels transiting the Strait of Hormuz on Tuesday, prompting retaliatory attacks by the United States. The LNG tanker was struck on its port side, causing an engine room fire, while the Saudi-flagged supertanker suffered minor damage off the coast of Oman.
In response, U.S. Central Command (CENTCOM) conducted massive offensive airstrikes hitting more than 80 military targets inside Iran. According to CENTCOM, the operation utilized precision-guided and 5,000-pound deep penetrator munitions against multiple coastal areas, including Qeshm Island, Sirik, as well as the major port city of Bandar Abbas.
The Trump administration also revoked a temporary sanctions waiver that allowed Iran to sell oil and petrochemicals, cutting off a key revenue stream for Tehran. The Khatam al-Anbiya Central Headquarters in Tehran, on the other hand, announced the formal closure of the Strait of Hormuz, warning all international commercial shipping that any further attempts to transit the waterway would face direct military intervention. The scale of the assault–much larger than the previous reprisal actions-marks the effective collapse of the fragile interim ceasefire signed in June.
Freight rates for tankers operating in the Gulf have surged as shipowners demand higher risk premiums, while refiners in Asia are scrambling to secure alternative cargoes from West Africa, the U.S., and Latin America in case Hormuz remains closed.
By Alex Kimani for Oilprice.com
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