Oil prices experienced a significant jump on Wednesday, July 8, with Brent crude rising over 3% to $74.16 a barrel and West Texas Intermediate (WTI) climbing 2.83% to $72.43 a barrel. This surge followed renewed military action in the Middle East, specifically US strikes against Iranian military targets in retaliation for attacks on shipping in the Strait of Hormuz. The US Treasury also revoked a sanctions waiver that had previously allowed Iran to sell oil, further exacerbating concerns about global oil supply.
The military actions included "powerful" strikes against Iranian air defense systems, coastal surveillance, and drone launch sites. Iran, in turn, reported explosions near Bandar Abbas, Qeshm Island, and Sirik. Earlier incidents involved attacks on three ships in the Strait of Hormuz, including a Qatari vessel, a gas carrier, and a Saudi oil tanker. These events have heightened fears that fighting could expand in the Strait, a critical chokepoint through which approximately one-fifth of the world's oil supply passes.
Analysts are closely monitoring the situation, with many noting that markets are highly sensitive to any military activity near shipping lanes due to the potential for supply disruptions. Saul Kavonic, a senior energy analyst at MST Marquee, described the flare-up as "a reminder to the market of how fragile passage through the strait still is." Carolyn Kissane of New York University stated that while the gains are significant, they might be temporary unless further attacks occur. The current situation suggests that the "new normal" involves periodic escalations, a departure from the cooled regional tensions observed in Q2 2026, which had led some banks, including Goldman Sachs, to predict a potential oil surplus.
