BY COMFORT OGBONNA
Oil prices climbed more than 5% on Wednesday, reaching their highest levels in two weeks after U.S. President Donald Trump declared that the agreement aimed at ending hostilities with Iran was no longer in effect, raising fresh concerns about the stability of Middle East oil supplies and the potential for prolonged geopolitical tensions.
Brent crude futures surged $3.82, or 5.15%, to $77.98 per barrel, while U.S. West Texas Intermediate (WTI) crude rose $3.70, or 5.25%, to $74.14 per barrel. Both global benchmarks recorded their strongest prices since June 23 as traders rapidly reassessed the outlook for energy markets amid renewed conflict in the region.
The latest rally followed gains of roughly 3% in the previous trading session after the United States revoked the general license that had allowed Iranian crude oil to be sold on international markets. The policy change signaled a tougher U.S. stance toward Iran and heightened fears that global oil supplies could tighten further.
Speaking before attending a NATO summit in Ankara, President Trump stated that the memorandum of understanding intended to bring an end to the conflict with Iran was “over,” indicating that Washington no longer viewed the temporary agreement as a viable path toward peace. He also made clear that he had little interest in reopening negotiations with Tehran, further dampening hopes for a diplomatic resolution.
The comments immediately intensified concerns among traders that military tensions in the Middle East could continue to escalate, increasing the risk of disruptions to one of the world’s most critical oil-producing regions.
Market analysts said Trump’s remarks have cast serious doubt over the future of the diplomatic process that many investors had hoped would restore stability to global energy markets. With uncertainty returning, expectations are growing that crude oil prices could remain elevated if geopolitical risks persist.
Some analysts believe oil is now moving closer to levels that better reflect current supply risks, with prices approaching $80 per barrel appearing increasingly justified given ongoing tensions, tighter inventories, and the possibility of additional disruptions to shipping routes.
The latest escalation followed U.S. military strikes targeting Iranian positions after American officials accused Iran of carrying out attacks on three commercial vessels traveling through the Strait of Hormuz. Shortly afterward, Iran’s Revolutionary Guards announced strikes against U.S. military installations in Bahrain and Kuwait, marking another dangerous phase in the conflict.
Shipping concerns have also intensified. Reports indicate that several oil and gas tankers have either postponed voyages through the Strait of Hormuz or altered their routes after Iran announced that vessels should only use shipping lanes approved by Tehran. The developments have renewed fears that one of the world’s most important energy corridors could face further disruptions.
The Strait of Hormuz is one of the busiest oil transit routes on the planet, carrying roughly one-fifth of global energy supplies before the conflict erupted earlier this year. Any prolonged disruption to traffic through the waterway has the potential to significantly affect global oil markets, transportation costs, and inflation worldwide.
Following the ceasefire agreement reached last month, crude prices had fallen sharply as investors anticipated that additional Middle Eastern oil supplies would return to international markets. Many traders also built large short positions, expecting prices to continue declining as geopolitical risks eased.
Those expectations have now been challenged by the renewed violence. As diplomatic efforts weaken and military activity intensifies, many investors are rushing to unwind bearish positions, contributing to the sharp rebound in crude prices.
Although Iran has denied responsibility for the recent attacks on commercial vessels, Qatar accused Tehran of being behind multiple incidents, including an attack on a Qatari liquefied natural gas tanker. According to reports, the vessel was struck by a drone that caused a fire in its engine room, adding to concerns about the security of commercial shipping in the Gulf.
The renewed attacks have once again focused attention on the vulnerability of global energy supply chains. Since fighting began earlier this year, several countries have relied on emergency oil inventories to offset supply disruptions, reducing stockpiles that could be needed if the conflict continues.
Adding further support to oil prices, industry data released Tuesday indicated that U.S. crude inventories declined again last week. Lower stockpiles suggest demand remains resilient while supplies continue to tighten. Analysts had expected inventories to fall by approximately 2.4 million barrels during the week ending July 3, reinforcing the perception of a tightening oil market.
With diplomatic efforts faltering, military tensions escalating, and global inventories under pressure, energy traders are preparing for continued volatility in oil markets. Investors will be closely monitoring developments in the Middle East, shipping activity through the Strait of Hormuz, and future policy decisions from Washington, all of which are likely to play a significant role in determining the direction of crude prices in the weeks ahead.