The United States has revoked the temporary sanctions waiver that allowed Iran to export crude oil, petrochemicals and refined petroleum products, marking a fresh escalation in tensions in West Asia after alleged Iranian attacks on three commercial vessels near the Strait of Hormuz. According to NBC News, the Trump administration took the action after unknown projectiles hit multiple tankers near the Strait of Hormuz, with the U.S. military shooting down additional drones fired by Iran. The Treasury Department issued a new document stating that transactions that were authorized under its previous sanctions waiver would have to wind down by July 17, significantly shortening the original timeline that had allowed sales until August 21, 2026. A US official told CNBC that "As President Trump and the administration have repeatedly affirmed, the MOU in effect with Iran is entirely performance-based." The official stated that "Iran will only reap benefits if they exhibit good behavior. Iran's actions in the Strait were wholly unacceptable to the United States and will be met with consequences."
The oil price rally was triggered by Iran's launch of missiles and drones at US military facilities in Bahrain and Kuwait after American forces struck more than 80 military targets across Iran overnight. According to Upstox News Desk, the renewed exchange has raised fears that the conflict could widen further across the Gulf and disrupt the tariff through the vital Strait of Hormuz. The US Treasury's Office of Foreign Assets Control revoked General License X, which had been issued on June 21, 2026 and temporarily allowed the production, delivery and sale of Iranian crude oil, petroleum products and petrochemicals under specified conditions. The earlier relaxation had enabled Iran to openly market its crude in US dollars for the first time in years, helping increase exports and contributing to lower global oil prices over recent weeks.
Crude oil prices climbed more than 3% on Wednesday after the US revoked the Iranian oil sanctions waiver, with Brent crude rising 3.2% to $76.54 per barrel and West Texas Intermediate gaining 3.2% to $72.72 per barrel in early trade, according to Upstox News Desk. The rally came after prices had eased in recent days to levels seen before the Iran conflict erupted in late February, as traders had expected a fragile ceasefire to hold. The revocation brought oil prices to their highest level since June 25, with the move effective immediately as per the Treasury Department's website. According to ING commodity strategists, while the revocation doesn't fundamentally change oil market dynamics, it's important from a sentiment perspective. As per Reuters, Saul Kavonic, head of research at MST Marquee, noted that the current flare-up is a reminder to the market of how fragile passage through the Strait of Hormuz remains. He warned that if tensions persist and traffic through the Strait remains below 50% of pre-war levels, the resulting supply constraints could support higher oil prices.
The attacks on the three ships have prompted US Central Command to launch attacks back at Iran on Tuesday after the U.K. Maritime Trade Operations Center said it had received two reports of attacks on ships transiting the Strait of Hormuz. According to NBC News, one ship was "struck by an unknown Uncrewed Aerial Vehicle," while a second was "struck by an unidentified projectile and is believed to have structural damage." An attack Tuesday on a third ship off Oman caused a fire to break out on board, the trade agency said. The Islamic regime has asserted its control over the strait, a critical chokepoint between the Persian Gulf and the Gulf of Oman that carries roughly 20% of the global oil and gas exports. Nearly one-fifth of the world's oil and liquefied natural gas trade passes through the narrow waterway, making it one of the most strategically important shipping routes globally. Any prolonged disruption could lead to higher freight charges, increased war-risk insurance premiums and longer shipping times, all of which would eventually raise the cost of importing crude.
India imports more than 85% of its crude oil requirement, making it highly sensitive to changes in international oil prices. According to Upstox News Desk, the average price of the Indian basket of crude oil stood at $114.48 per barrel in April, $106.23 in May and $83.22 in June, before declining sharply to $70.76 per barrel as of July 7. Union Petroleum and Natural Gas Minister Hardeep Singh Puri explained that oil companies typically procure crude oil around two months in advance and are currently processing cargoes bought in April and early May, when international prices were substantially higher. Asked whether the decline in crude prices would translate into lower petrol and diesel prices, Puri said it would be a "legitimate question" if international oil prices stayed low for the next few weeks. With prices rising again, consumers may have to wait longer for any relief in fuel prices.
