Brent crude jumps 3% as US strikes Iran, revokes oil waivers

Brent crude surged more than 3% after the US launched airstrikes on Iran and revoked oil-sale waivers, escalating a conflict that had been paused under a fragile 60-day ceasefire.

The US military struck Iranian air defenses, coastal surveillance systems, surface-to-air missiles, anti-ship cruise missiles and drone launch sites early Wednesday local time, hours after three commercial vessels were hit by projectiles in the Strait of Hormuz. Washington also revoked a temporary license that had allowed Tehran to sell crude oil globally, giving Iran until July 17 to wind down any outstanding transactions.

"The MOU in effect with Iran is entirely performance-based," a US official said, speaking on condition of anonymity. "Iran's actions in the Strait were wholly unacceptable to the United States and will be met with consequences."

Brent crude futures for September delivery rose 2.22% to trade near $78 a barrel in Asian morning trading on Wednesday, adding to a roughly 3% overnight spike. West Texas Intermediate crude for August gained 2.36%. The rally lifted Hong Kong-listed energy majors: CNOOC Ltd. jumped 5.4% to HK$22.24, PetroChina Co. added 3.8% to HK$9.28, and Sinopec Corp. rose 1.47%.

The escalation threatens to unravel a ceasefire framework that had paused direct hostilities between the US and Iran since late June. Under the interim agreement, the Treasury had issued a general license on June 22 authorizing Iranian oil sales through Aug. 21 — a concession that gave Tehran a revenue lifeline during negotiations for a permanent deal. The revocation removes that cushion just as indirect talks in Qatar ended last week without headway.

Strait of Hormuz at the Center

The waterway, through which about a fifth of the world's petroleum passes, has become the central lever in the standoff. A Saudi-flagged supertanker, the Wedyan, and a Qatari liquefied natural gas carrier, the Al Rekayyat, both reported damage from drone or projectile strikes. Qatar summoned Iran's deputy ambassador and handed him a protest note, holding Tehran "fully legally responsible" for the attack.

Iran's foreign ministry condemned the US strikes as a breach of the framework agreement and said it would "take decisive measures to protect its interests and national security." The ministry also claimed commercial vessels faced risks for using routes not coordinated with Iran, a statement that underscored Tehran's insistence on controlling passage through the strait.

The attacks marked the first major breach of the ceasefire since it took effect, reviving concerns over freedom of navigation. Iran had lifted its blockade of the waterway as part of the truce, but its clerical rulers have signaled they aim to install a permanent system to collect fees after the 60-day period — a shift that would fundamentally alter the balance of power in a region where the US has long acted as guarantor of security.

Oil Market Outlook

The supply risk premium has re-entered crude pricing after a period of relative calm. Before the latest escalation, Brent had been trending lower on expectations of a final peace deal that would restore full Iranian exports to global markets. Citi analysts said in a note they expect Brent to fall back to $60 to $65 per barrel before year-end, assuming the conflict de-escalates.

President Donald Trump on Monday reiterated his hardline stance, telling reporters: "We're either going to make a deal or we're going to finish the job." The next round of negotiations has no scheduled date, and Iran's Foreign Minister Abbas Araqchi has said talks "will not commence if threats continue."

For oil markets, the key question is whether the US will enforce a full blockade of Iranian exports or whether the revocation is a negotiating tactic. A sustained disruption could push Brent above $85, while a return to the ceasefire track would likely erase the current risk premium within weeks. The next catalyst will be whether Iran retaliates militarily or returns to the negotiating table — and whether the US follows through on Trump's threat to "finish the job."

This article is for informational purposes only and does not constitute investment advice.