Oil Prices Surge Over 6% Following Trump's End to Iran Ceasefire

Oil prices rose by over 6% on Wednesday after US President Donald Trump declared the ceasefire with Iran over and the US Treasury Department canceled the temporary waiver on sanctions related to Iranian oil, according to Reuters.

Brent crude futures increased by $4.57, or 6.16%, reaching $78.73 per barrel, while West Texas Intermediate (WTI) crude rose by $4.23, or 6.01%, to $74.67 per barrel. Both benchmarks reached their highest levels since June 22.

Recently, both crude prices had declined to levels close to those recorded before the outbreak of conflict with Iran in late February.

Details on the Iranian Waiver Cancellation

Bloomberg reported that market concerns intensified after the US Treasury revoked a waiver that allowed Iran to produce, deliver, and sell oil under a memorandum of understanding with Tehran. The Treasury stated it would grant a transition period ending on July 17 to complete oil transactions permitted under the now-canceled waiver.

The United States had previously granted Tehran a 60-day temporary exemption from oil sanctions but ended it early, citing Iranian attacks as the reason for discontinuing the waiver, according to the Office of Foreign Assets Control (OFAC).

How Does the Waiver Cancellation Affect Oil Prices?

Richard Hunter, head of markets at Interactive Investor, commented on the oil price increase, saying, "US strikes and the reimposition of sanctions on Iranian oil have revived doubts about peace prospects in the Middle East, pushing oil prices up again after weeks of decline following the announcement of a temporary ceasefire."

Euro News noted that despite commitments to seek a peaceful resolution to the conflict, the recent escalation has heightened uncertainty surrounding oil prices, which had fallen from peaks well above $100 per barrel during the war.

Recent Military Escalation and Its Impact

The confrontation between the United States and Iran entered a new phase over the past two days, involving US airstrikes targeting more than 80 sites inside Iran. These strikes were in response to Iranian attacks on oil and gas tankers and commercial vessels in the Strait of Hormuz, according to Reuters.

The escalation's effects extend beyond navigation; the International Maritime Organization warns that ongoing attacks are putting pressure on approximately 6,000 sailors still stranded on their ships, unable to safely leave the strait.

Iran's Oil Export Activity Since the Agreement

Data from United Against Nuclear Iran indicated that since the signing of the interim agreement, there have been 19 recorded loadings of Iranian oil and petrochemicals, along with 46 tankers carrying Iranian oil or fuel off the Iranian coast.

President Trump announced on Wednesday that the memorandum of understanding with Iran "seems to be over," following a series of US strikes against Iran in retaliation for Tehran’s attacks on oil and gas tankers in the Strait of Hormuz, as reported by CNN.

Challenges in Iranian Oil Marketing

Even before the waiver cancellation, Iran faced difficulties marketing its oil due to a large influx of competing Gulf crude, loss of price advantage for Iranian barrels, and ongoing risks related to sanctions, insurance, and shipping.

Reuters cited market participants stating that the National Iranian Oil Company and intermediaries have intensified efforts in recent days to sell crude, submitting offers to refineries in Japan, Taiwan, and South Korea.