Oil soars more than 6% as Trump rules out Iran deal, threatens more strikes
Oil prices had been recovering following a memorandum of understanding signed last month to end the war, but they rose by more than 6% early on Wednesday.
Brent crude oil price rose by more than 6% on Wednesday after President Donald Trump declared the interim accord to end the war with Iran “over” and the US launched more strikes on Iran. Trump also threatened to conduct more strikes against Iran on Wednesday evening and warned of possibly reinstating a US naval blockade in the Strait of Hormuz.
What happened: Brent, the international benchmark, briefly climbed to $79 a barrel at 5:25 a.m. EDT on Wednesday, before easing to $77.69 at 9:52 a.m. EDT, up 4.77% from Tuesday's close.
"To me, I think it's over. I don't want to deal with them," Trump said on the sidelines of a NATO summit in the Turkish capital, Ankara.
Trump added that US negotiators could continue talks "if they want" but said he saw it as "a waste of time." He later threatened to hit Iran "hard again tonight."
Overnight, US Central Command said it had bombed more than 80 military targets in Iran after three commercial tankers separately reported being hit with projectiles while attempting to transit the Strait of Hormuz on Tuesday.
The US also revoked a license allowing Iran to sell oil, giving the Islamic Republic until July 17 to wind down any transactions. Under the memorandum of understanding signed between the two countries in June, the US Treasury allowed the sale of crude oil, petroleum and petroleum products of Iranian origin — a crucial source of government revenues — until Aug. 21.
Iran and the US signed the memorandum intended to provide a 60-day window for negotiations for a permanent agreement to end the war and curtail Tehran’s nuclear program. However, the Qatari-mediated talks have shown no sign of progress.
Why it matters: The renewed fighting threatens another escalation in the Strait of Hormuz, where Iran has repeatedly attacked commercial shipping since the war began on Feb. 28. The most recent attack was on a Qatari LNG tanker and a Saudi crude oil tanker near the strait on Tuesday.
At least four oil and gas tankers turned back from transiting the waterway, ship-tracking data from LSEG and Kpler showed. Three LNG tankers controlled by state-owned QatarEnergy — Al Ghariya, Duhail and Al Ruwais — had been heading toward the strait before changing course to turn away late on Tuesday. The data also showed that an Indian-flagged tanker carrying 2 million barrels of Kuwaiti crude loaded late last week made a U-turn off the tip of Oman at the Strait of Hormuz on Wednesday.
The Strait of Hormuz, between Iran, Oman and the United Arab Emirates, normally handles around one-fifth of global oil and LNG trade. Before the war, roughly 130 to 140 vessels transited the waterway daily, but traffic has fallen to almost none after repeated attacks by Iran on commercial shipping, US assets, Israel and Gulf energy infrastructure.
Know more: Brent traded near $70 before the war and peaked at almost $115 in early May amid concerns about prolonged supply disruptions. Prices gradually retreated after the June 17 US-Iran memorandum of understanding eased fears of further escalation, and shipping through the strait began to recover, falling to around $71 by June 25 before rebounding on Wednesday.
