Crude Oil Jumps after Trump Says Peace is Over in the Middle East

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

The price for Brent crude oil bounced back toward the $80 mark after the U.S. president said a peace agreement with Iran was void. That followed attacks on maritime interests in the Middle East.

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Gloves Off Following Attacks on Shippers

Crude oil prices rose sharply on Wednesday amid questions over the durability of a tacit truce in the Middle East, though the U.S. Department of Energy believes the coast is clear for crude oil supplies.

Industrial Info Resources has monitored the war-related impacts since fighting began in late February. In June, dozens were injured during a drone attack on the Kuwait International Airport, while the nation's Mina al-Zour Refinery continues to recover following early-war issues.

U.S. President Donald Trump on Wednesday said peace is "over" in the Middle East after a string of attacks on regional shippers. U.S. military forces struck Iran in response, leaving at least one person dead and two others injured.

This comes as much of the regional Shiite population is in a state of mourning for the funeral of Ali Khamenei, the clerical leader killed in joint U.S.-Israeli airstrikes in February. His coffin was on display Tuesday in the Iraqi holy city of Najaf.

Elsewhere on Tuesday, IIR Energy issued an alert to clients about maritime attacks in the region. One vessel apparently laden with liquefied natural gas (LNG) from Qatar was attacked off the coast of Oman, while a Saudi-flagged oil tanker was also struck by projectiles.

The head of the International Maritime Organization, a U.N.-backed agency tasked with overseeing global shipping, said the Strait of Hormuz should be avoided.

"As long as the safety and security of crews cannot be assured, I urge flag States, shipowners, operators and all relevant authorities to avoid exposing seafarers to unnecessary danger by transiting the Strait," Secretary-General Arsenio Dominguez said.

"Before the latest escalation, competition among regional producers to reclaim clients and lost market share had continued to intensify," Ole Hanson, the head of commodity strategy at Saxo Bank in Denmark said in a Wednesday newsletter. "A small mountain of barrels had been piling up inside the Gulf, increasing the need to move volumes quickly to free storage capacity and allow production to resume or increase."

Energy Department Upbeat Nonetheless

Markets may be muted given the transit risks in the region. In its monthly market report for July, the U.S. Energy Information Administration (EIA), part of the Energy Department, acknowledged it would take time for global markets to fully recovery given the drag on crude oil inventories.

In the U.S., strategic reserves are halfway depleted and commercial inventories are well-below the five-year average for this time of year, leaving emergency buffers at a premium should the war escalate further or should a hurricane hit major U.S. refinery centers.

But based on estimates made before Trump's announcement on Wednesday, EIA said it expected inventory draws would taper off by the end of the year.

"After this initial adjustment period, which will last for much of 3Q26, we expect that oil markets will return to the pre-conflict state of oversupply," EIA said.

Hanson in his note, however, said the current market seems focused less on concerns about a surplus and more about the ongoing supply-side risks.

"As one of the world's most important energy chokepoints, even limited disruption can have an outsized impact on prompt pricing, freight costs and market sentiment," he said.

The Strait was opened briefly as part of a 14-point memorandum of understanding between the United States and Iran. The U.S. Treasury Department, however, revoked waivers that would allow Iran to sell its crude oil, reneging on parts of the understanding.

EIA expects the price of Brent crude oil to average $70 per barrel by the fourth quarter. Futures contracts as far away as February 2027, however, are still fetching $75 per barrel. Brent was trading closer to $80 on Wednesday, spiking sharply after Trump's announcement.

By the Numbers

• 8% spike in Brent crude oil
• $70 per barrel expected by the U.S. government

Key Takeaways

• Fighting intensifies following maritime attacks in the Middle East.
• A U.S. government report is forecasting a market surplus, however.

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).