Global oil prices jumped more than 5% to a two-week high on Wednesday after the U.S. launched retaliatory military strikes against Iran and revoked its oil export license, collapsing a fragile ceasefire.
Brent crude futures surged 5.76% to $78.43 a barrel, while U.S. West Texas Intermediate climbed 5.55% to $74.35, reversing a multi-week downward trend driven by previous oversupply cushioning.
The price spike immediately rattled broader financial markets, triggering fears of renewed inflation. The Dow Jones Industrial Average dropped over 500 points, or roughly 1%, during opening trading hours.
The market disruption followed U.S. Central Command airstrikes destroying Iranian maritime assets. The operations targeted Islamic Revolutionary Guard Corps missile sites and attack boats in Bandar Abbas, Sirik, and Qeshm Island.
Washington ordered the strikes after projectiles struck three commercial tankers in the Strait of Hormuz waterway. The damaged ships included the Qatari liquefied natural gas tanker Al Rekayyat and the Saudi supertanker Wedyan.
Tensions escalated further after President Donald Trump declared the 60-day interim peace memorandum of understanding, signed weeks ago on June 18, officially “over” during a NATO summit in Turkey.
In tandem with the military response, the U.S. Treasury’s Office of Foreign Assets Control revoked General License X, halting Tehran’s temporary permission to sell crude oil in U.S. dollars.
The government replaced the waiver with General License X1, forcing global market participants to completely wind down existing Iranian oil transactions before a strict deadline of July 17.
Iran’s Revolutionary Guards retaliated early Wednesday by targeting U.S. military sites in Bahrain and Kuwait, heightening anxieties over a broader conflict inside the world’s most critical energy chokepoint.
The market structure shifted sharply into backwardation, meaning immediate crude prices rose significantly above later-dated barrels. This pricing anomaly typically signals an acute shortage of prompt physical supplies.
The geopolitical breakdown threatens global energy flows. The Strait of Hormuz chokepoint handles roughly one-fifth of global oil and liquefied natural gas transit volumes during peacetime operations.
