Oil Prices Surge Above 5% as Trump Declares Iran Truce ‘Over’

Oil prices climbed more than 5 percent on Wednesday, reaching their highest levels in two weeks after US President Donald Trump declared that the memorandum of understanding aimed at ending the conflict with Iran was “over,” reigniting concerns about crude supply disruptions in the Middle East.

Brent crude futures rose $3.82, or 5.15 percent, to $77.98 a barrel by 11:32 a.m. Saudi time, while US West Texas Intermediate crude gained $3.70, or 5.25 percent, to $74.14 a barrel. Both benchmark contracts reached their strongest levels since June 23 after already posting gains of around 3 percent in the previous session.

Tuesday’s rally followed the US decision to revoke a general license that had allowed the sale of Iranian crude, tightening pressure on global energy markets.

Speaking before a NATO summit in Ankara, Trump said the interim agreement designed to halt the conflict between the United States, Israel and Iran had collapsed. He also indicated that Washington was no longer interested in engaging with Tehran, raising fresh uncertainty over regional stability.

Market analysts said the latest developments have significantly altered expectations for oil supplies.

Bjarne Schieldrop, chief commodities analyst at SEB, said Trump’s remarks had cast serious doubt over the future of negotiations with Iran. He added that oil prices closer to $80 a barrel better reflected current market conditions than prices near $70.

The renewed tensions follow reports of attacks on commercial shipping in the Strait of Hormuz, one of the world’s most important energy transit routes.

US Central Command said recent American airstrikes were carried out in response to Iranian attacks on three commercial vessels navigating the strategic waterway. Iran’s Revolutionary Guards later announced strikes on US military sites in Bahrain and Kuwait early Wednesday.

Energy markets also reacted to reports that several oil and gas tankers had either turned back or delayed passage through the Strait of Hormuz after Iran announced that only shipping routes designated by Tehran would be considered safe.

PVM analyst Tamas Varga said at least four tankers had changed course, adding to concerns about the uninterrupted movement of crude oil through the region.

Qatar accused Iran of carrying out attacks on commercial vessels, including a drone strike that damaged a Qatari liquefied natural gas tanker and caused a fire in its engine room. Iran has not accepted responsibility for the incidents.

The Strait of Hormuz normally handles about one-fifth of global oil and gas supplies, making any disruption a major concern for energy markets. Since fighting began earlier this year, many countries have relied on strategic inventories to offset supply shortages.

Adding support to prices, industry data released by the American Petroleum Institute showed US crude oil inventories declined again last week. Analysts surveyed by Reuters had expected stockpiles to fall by approximately 2.4 million barrels in the week ending July 3, reinforcing expectations of a tightening global oil market.