President Trump warned Iran that the US was preparing for another night of strikes after Iran attacked commercial ships in the Strait of Hormuz and subsequently retaliated against US military sites in the Persian Gulf. Trump declared the interim ceasefire "over" but stated negotiations could continue, though he expressed doubt about their outcome. These events led to a significant spike in oil prices, with Brent crude rising over 5% after his comments, signaling renewed instability in the crucial waterway.
The recent escalation began with attacks on three tankers in the Strait of Hormuz, prompting the US military's Central Command to launch strikes on Iranian targets, including air-defense systems, radars, and over 60 small boats used by the Revolutionary Guard. Iran retaliated by targeting US military sites. Notably, the US had earlier revoked a license allowing Iran to openly conduct oil sales in US dollars, a part of the interim deal. Qatar, a key mediator, condemned the attack on a Qatari natural gas tanker and held Iran legally responsible.
The Strait of Hormuz is a critical chokepoint through which a fifth of the world's traded oil and natural gas flowed before the recent conflict. Iran's ability to disrupt shipping in the strait has been its primary strategic advantage, leading to higher prices for energy, fertilizer, and food, which pressured the US to pursue a deal. However, the interim agreement for toll-free passage is only for 60 days, and Iran has expressed intentions to control vessel routes and charge fees, upending decades of practice. Some analysts, like Dina Esfandiary of Bloomberg Economics, predict a continuation of "tit-for-tat exchanges" that hinder negotiations.
Despite the heightened threat, US-supported shipping transits have continued, driven by Gulf oil producers' commercial incentive to export. Richard Bronze from Energy Aspects noted that this effort is actively supported by Washington to restock global oil markets. However, oil transit through the strait in early July was approximately 8 million barrels per day, only half of pre-war levels. Rising crude supplies from other nations are also diminishing Iran's leverage. The US has further threatened to strike Iran's civilian infrastructure and seize Kharg Island, which houses most of Iran's oil facilities, to end Iran's control over the strait.
