Crude oil extended its rally for a second straight session on Wednesday, with global benchmarks touching one-month highs as Washington’s reimposed naval blockade of Iran collided with Tehran’s warning that it could choke off shipping lanes far beyond the Strait of Hormuz.
Brent futures rose as much as 2% to $86.44 a barrel by mid-morning in London, while West Texas Intermediate gained a similar margin to $80.77.
The moves built on Tuesday’s advance, when Brent traded as high as $86.47 a barrel, its strongest print since June 12, while WTI reached levels last seen on June 16, the day before the short-lived U.S.-Iran memorandum of understanding was signed.
That truce, brokered in mid-June after months of fighting, is now widely regarded as dead. The June 17 ceasefire collapsed after U.S. forces struck more than 80 targets inside Iran over the July 12-13 weekend, prompting Iran’s Revolutionary Guard to shut the Strait of Hormuz once more.
President Trump announced the blockade’s return on Truth Social, pairing it with a proposed 20% toll on all cargo transiting the strait and a declaration that the U.S. would serve as, in his words, guardian of the waterway, though he later dropped the fee proposal after the International Maritime Organization objected that there was no legal basis for such a charge.
The human and commercial toll is mounting. Traffic through the strait had plunged more than half week-over-week even before Trump’s announcement, with the number of vessels transiting falling into the teens on some days, down from dozens previously. Roughly 230 loaded tankers are now stranded inside the Gulf with nowhere to deliver their cargo, underscoring how quickly the maritime bottleneck has reasserted itself.
Overnight, the Pentagon confirmed a fresh wave of strikes. U.S. forces hit Iranian military targets, including Bushehr, Chah Bahar, Jask, Konarak, Abu Musa, and Bandar Abbas, in an effort to further degrade Tehran’s capacity to threaten commercial shipping.
Iran’s Revolutionary Guard, in a statement carried by state media, cast the standoff in stark terms, warning that regional energy exports would either be shared by all or denied to all, language analysts read as a signal that Tehran could activate its Houthi allies in Yemen to close the Bab el-Mandeb Strait, opening a second front against Western shipping in the Red Sea.
The blockade is already reshaping physical oil flows. UBS analyst Giovanni Staunovo noted that Iranian crude exports, which had run between 1.5 million and 2 million barrels a day in recent weeks, are now being squeezed directly by the U.S. Navy’s presence.
Goldman Sachs, meanwhile, estimated that broader Gulf export volumes, which had clawed back to more than 80% of pre-war levels after June’s short-lived deal, have slipped below 50%, or roughly 11 million barrels a day, over the past week alone.
The bank has floated the possibility of Brent breaking above $110 in the fourth quarter should the export recovery continue to stall a scenario that would still fall short of the war’s earlier peak, when Brent spiked to $114 in early May.
The economic knock-on effects are already visible at the pump. Gasoline analysts have warned the national U.S. average could approach $4 a gallon within days as retailers pass through the crude spike, complicating a Federal Reserve already contending with inflation running above target.
Fighting has also spread beyond the strait itself. Iran’s military claimed drone strikes on U.S. positions at Jordan’s Azraq base, while the Revolutionary Guard said it had targeted weapons and storage sites in Bahrain and Kuwait, claims Reuters and the Pentagon had not independently verified as of Wednesday morning.
Trump, in an interview aired Tuesday night, signaled that energy infrastructure remains on the target list, telling Fox News that such strikes would come “ultimately,” even if held for last.
With mediators from Oman, Qatar, and Pakistan still said to be in contact with both sides, traders are left weighing whether this is another temporary flare-up in a war that has repeatedly cycled between de-escalation and collapse or the start of a more sustained confrontation across two of the world’s most critical energy corridors.
WHAT YOU SHOULD KNOW
The June ceasefire between the U.S. and Iran has effectively collapsed. Washington’s reimposed naval blockade and fresh strikes on Iranian territory, combined with Tehran’s threat to extend the conflict to the Bab el-Mandeb Strait via its Houthi allies, put two of the world’s most critical oil chokepoints at risk simultaneously, not just one.
With roughly 230 tankers already stranded in the Gulf and Goldman Sachs warning Brent could top $110 if exports keep stalling, the key thing to watch isn’t the day-to-day price move but whether this escalation holds or spirals into a wider disruption of global energy flows.
