Crude oil prices jumped back to $74 a barrel after a fragile Iran ceasefire collapsed this week, with fresh tanker attacks near the Strait of Hormuz reviving fears over the world's most important oil chokepoint. The latest escalation risks triggering renewed disruption in energy markets and undermining the interim US-Iran peace agreement reached last month. Brent crude had touched a peak near $125 a barrel in late April, two months after the US and Israel began the military campaign against Iran, before returning toward pre-conflict levels on growing signs of a recovery in supplies. The attacks come after Iran fired at least two missiles at commercial ships transiting the Strait of Hormuz on Monday night, testing a late-June deal with the US to halt attacks as the two sides work toward a peace agreement.
Big traders were betting on higher oil prices even before the ceasefire broke, with large speculators adding 1,722 long contracts and cutting 1,020 shorts as of June 30, lifting their net long above 23,700 contracts, according to the latest Commitments of Traders (COT) report. Total open interest rose by 3,568 contracts to 222,308, showing fresh money moving into oil futures despite prices sliding toward $68 on fears of a supply glut. A tiny corner of the crypto market, WTIC (WTI Coin), a token backed by a real, redeemable barrel of oil, jumped from 27 to 267 holders in five days as crude slid, with a single $367,000 transfer hitting on July 3 before flows went quiet over the July 4 holiday. WTIC holds just $79,000 in value but is the only backed oil token tracked by data site rwa.xyz, providing an early signal that both large futures traders and small on-chain buyers were positioning for a rebound.
A statement by the US Central Command said its forces completed a new round of offensive strikes against Iran on July 7, hitting over 80 targets with precision munitions as an immediate response to Iran's latest attacks on commercial vessels transiting the Strait of Hormuz. US forces struck Iranian air defence systems, command and control networks, coastal radar sites, anti-ship missile capabilities, and more than 60 Islamic Revolutionary Guard Corps small boats in and near the strait to degrade Iran's ability to continue attacking international commerce flowing through the international trade corridor. The military action followed attacks on three commercial tankers within a 24-hour period in and around the Strait of Hormuz, with all three vessels sustaining damage although no casualties were reported, according to the UK Maritime Trade Operations (UKMTO). The unwarranted aggression by Iranian forces is a clear and dangerous violation of the ceasefire and undermines freedom of navigation, the US stated.
Adding to market uncertainty, the Trump administration revoked a key sanctions waiver that had permitted Iran to continue selling crude oil internationally under the interim agreement, according to a notice published by the US Treasury Department. Companies operating under the waiver have until July 17 to complete existing transactions, as reported by PTI. Iran criticised both the military strikes and the withdrawal of the waiver, describing the actions as a violation of the memorandum of understanding and accusing Washington of acting in "bad faith." Washington reimposed sanctions it had eased under a 60-day oil license on July 7 and 8, following the tanker attacks and US strikes near the Strait of Hormuz. US WTI crude has gained more than 5% this week after the United States launched additional air strikes on Iran, according to Aamir Makda, Commodity & Currency Analyst at Choice Broking.
Crude oil futures traded higher after the US military conducted fresh attacks on Iran and the revocation of a US waiver that had allowed Iran to sell crude oil in global markets. At 9.15 am on Wednesday, September Brent oil futures were at $76.09, up by 2.60 per cent, and August crude oil futures on WTI were at $72.29, up by 2.63 per cent, as reported by The Hindu BusinessLine. July crude oil futures were trading at ₹6886 on the Multi Commodity Exchange (MCX) during the initial hour of trading on Wednesday, up by 2.70% from the previous close of ₹6705, while August futures were trading at ₹6893 against the previous close of ₹6724, up by 2.51%. In their Commodities Feed for Wednesday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said oil prices spiked following Iranian attacks on three ships in the Strait of Hormuz, including an LNG carrier and an oil tanker. While the revocation doesn't fundamentally change oil market dynamics, it is important from a sentiment perspective and heightens the risk of a breakdown in the temporary deal between the US and Iran, according to ING analysts.
The contango market structure has deepened significantly as increased shipments through the Strait of Hormuz have caused a glut near-term. On Friday, the first-month Brent futures contract for September traded below the five subsequent contract months, representing a sharp deterioration from last week when it was trading at a discount to the second contract month. Brent spreads for the six-month period dropped to minus 56 cents per barrel on Thursday before recovering to a small premium on Friday. As reported by ICIS global oil markets leader David Jorbenaze, the newly released crude was chasing a demand that had already been met and reduced. Storage plays are profitable if contango is high enough to cover the associated financing and storage fees between 80 cents and $1 per barrel for companies without their own tanks, according to a European crude oil trader. Analysts said global oil inventories were depleted during the prolonged disruption to shipping through the strait and will need time to rebuild, with inventories expected to stay under pressure until additional crude supplies from the Gulf begin reaching international markets. Both oil benchmarks sit far below their wartime highs, with Brent having dropped more than 22% over the past month and WTI falling nearly 24% in the same span, as reported by The Hindu BusinessLine.
