US President Donald Trump announced the cessation of a weeks-old truce with Iran, stating, "As far as I am concerned, it's over." This declaration came during a NATO summit in Ankara. Following this, American forces launched a fresh wave of strikes against Iran for the second consecutive night on Wednesday. Trump justified these strikes as "retribution" for Iranian attacks on ships in the Strait of Hormuz and issued a stern warning of further action if Tehran retaliated, posting on Truth Social, "If it happens again, it will get much worse!"
These military actions, combined with the US Treasury Department's decision to bar new sales of Iranian oil after July 7, significantly imperil the interim agreement reached between Washington and Tehran last month. The deal had aimed to end the conflict and included a 60-day waiver allowing Iranian oil sales. US Central Command stated the bombing campaign would "further degrade [Iran's] ability to threaten freedom of navigation." The conflict's resurgence risks a return to hostilities, potentially leading Iran to once more close the Strait of Hormuz, through which a fifth of global oil supplies typically flow, threatening a new energy supply crisis.
The renewed conflict has sent ripples through financial markets. Brent crude, the international benchmark, surged past $80 a barrel, reaching a two-week high before dipping slightly below $78 a barrel. The IMF has cautioned that renewed conflict in the region risks driving up global inflation, damaging supply chains, and negatively impacting financial markets. Bob McNally, president of Rapidan Energy Group and a former White House official, noted that the revocation of the oil sales waiver signals to complacent markets that the ceasefire's durability was overestimated, suggesting that market participants now need to price in additional risk.
