Oil prices jumped on Tuesday, with both major benchmarks hitting near one-month highs, after Washington reimposed a naval blockade on Iran and the two sides exchanged fresh strikes over the Strait of Hormuz, the narrow chokepoint that once carried about a fifth of the world’s oil and gas.
Brent crude jumped $2.74, or 3.29%, to $86.04 a barrel by 07:51 GMT, its highest mark since June 12, while U.S. West Texas Intermediate rose $2.21, or 2.83%, to $80.35, a level not seen since June 16.
The move followed an even sharper spike a day earlier, when Brent posted its largest single-session gain since 2020 after a weekend of American airstrikes on Iranian territory.
The rally effectively erases the calm that had settled over energy markets since June 17, when U.S. President Donald Trump and Iranian officials signed a memorandum of understanding intended to end the months-long conflict that began in late February. That truce proved short-lived. Over the July 12–13 weekend, U.S. forces struck dozens of targets inside Iran, and Iran’s Revolutionary Guard responded by moving to shut the strait once again.
On Monday, Trump announced on social media that Washington was reinstating what he termed the “Iranian Blockade,” barring vessels tied to Iran from entering or leaving its ports while separately floating a 20% toll on cargo passing through the strait, a proposal international maritime authorities have already challenged as having no legal basis.
“Despite signing the memorandum of understanding and having a deal, this did not last for even a few weeks. So that’s the concern the market is trying to price right now,” said ANZ analyst Soni Kumari. She added that while the worst of the escalation may be over, prices could still push higher into an $85-to-$90 range should the disruptions persist.
The renewed violence has already left a mark on the water. Two tankers registered in the United Arab Emirates were struck by Iranian cruise missiles in the strait’s southern shipping lane, within Omani territorial waters, the UAE’s defense ministry said Monday, killing one Indian crew member and injuring eight others.
Shipping trackers reported that daily transits through Hormuz have fallen to their lowest level in two months, down from the 18 to 22 vessels a day recorded before fighting resumed to as few as six in some recent windows, leaving well over 200 loaded tankers reportedly stranded in the Gulf with nowhere to unload.
Citi warned in a client note that the odds have risen of Tehran abandoning the June memorandum altogether until after the U.S. midterm elections, a scenario the bank said would likely keep oil prices elevated for longer.
Iranian Oil Minister Mohsen Paknejad said on his official Telegram channel that the country’s crude exports are continuing largely as normal, despite Washington’s decision last week to cancel a 60-day waiver on oil sanctions.
The instability is not confined to the Gulf’s mouth. Yemen’s Houthi movement fired missiles into Saudi Arabia on Monday, accusing Riyadh of bombing an airport under Houthi control. “If the Houthis extend their attacks to Saudi crude products in the Red Sea, it could put further uncertainties on crude flows from the region,” said Simon Wong, a portfolio manager at Gabelli Funds.
Adding to the uncertain demand picture, China’s crude imports plunged 41.3% in June to their lowest level in nearly a decade, as refinery run rates fell to a ten-year low.
Analysts pointed to soft domestic demand and Beijing’s curbs on exports of refined oil products, a move aimed at safeguarding the country’s own energy security as the war in the Gulf drags on.
Taken together, traders say the market is now recalibrating for a conflict that refuses to stay resolved: a blockade layered atop a counter-blockade, a proposed toll with no clear legal footing, and a strait whose traffic has yet to recover from a war that first erupted in February.
Whether Tuesday’s rally proves another spike in a volatile cycle or the start of a sustained climb back toward the $114 highs seen in May will depend, analysts say, on how long this latest round of hostilities lasts.
WHAT YOU SHOULD KNOW
The June 17 US-Iran truce has effectively collapsed, and oil markets are now pricing in a conflict that keeps reigniting rather than resolving.
With Hormuz transits at a two-month low, over 200 tankers stranded in the Gulf, and Washington’s new blockade-plus-toll regime adding legal and logistical uncertainty on top of the military risk, the key thing to watch isn’t the price level itself; it’s whether tanker traffic through the strait actually recovers.
