US revokes Iran oil waiver July 7, crude jumps on supply risk

The US revoked a license authorizing Iranian oil sales and accused Tehran of firing on commercial vessels in the Strait of Hormuz, sending crude prices higher.

The US Treasury revoked a general license allowing Iranian oil sales on Tuesday and accused Tehran of firing on three commercial vessels in the Strait of Hormuz, sending crude prices higher and adding a military risk premium to global oil markets.

"The initial indications show Iran fired on three commercial vessels in the Strait of Hormuz in recent days," a senior US official said, calling the actions "completely unacceptable" and warning of consequences. The official added that US negotiators continue to pursue a final agreement with Iran in good faith despite the escalation.

The Office of Foreign Assets Control revoked the general license effective immediately, with a 10-day wind-down period through July 17 for existing transactions to be completed. Iran has not yet responded to the allegations or the sanctions action. The Strait of Hormuz handles roughly one-fifth of global oil consumption, with about 20 million barrels per day transiting the waterway, making it the world's most critical oil chokepoint. Any disruption to shipping there would affect crude flows to Asia, Europe and the US Gulf Coast.

The removal of Iranian supply from global markets — estimated at roughly 1.5 million barrels per day under the waiver — combined with the threat to commercial shipping creates a dual supply shock for crude markets. If negotiations collapse entirely, oil could see sustained upward pressure through the third quarter, with Brent and WTI benchmarks likely to price in a higher geopolitical risk premium. The wind-down period allows buyers until July 17 to complete existing transactions, potentially creating a near-term supply squeeze.

Strait of Hormuz Risk Premium

The last time the US imposed similar restrictions on Iranian oil exports was in 2018 following the withdrawal from the Joint Comprehensive Plan of Action, which removed roughly 1 million barrels per day from global markets and pushed Brent crude above $80 per barrel within three months. The current escalation comes as OPEC+ has maintained production cuts of about 2 million barrels per day through 2026, leaving limited spare capacity to offset any prolonged supply disruption. Saudi Arabia holds most of the group's spare capacity at roughly 1.5 million barrels per day, according to data from the International Energy Agency.

Energy sector equities rose in sympathy with crude prices, while airline and shipping stocks faced headwinds on expectations of higher fuel costs. The 10-day wind-down period may create a front-loaded supply squeeze as buyers rush to complete transactions before the July 17 deadline. The next key date for markets is the July 17 expiration of the wind-down period, after which any Iranian oil transactions would risk US sanctions enforcement. Traders will also watch for any Iranian retaliatory measures, including potential further disruptions in the Strait of Hormuz.

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