The US-Iran ceasefire collapsed Wednesday as President Trump declared the deal "over" and the Pentagon launched a new wave of strikes against Iranian military targets, sending crude prices to a two-week high and triggering a selloff in European equities.
The US-Iran ceasefire collapsed Wednesday as President Trump declared the deal "over" and the Pentagon launched a new wave of strikes against Iranian military targets, sending crude prices to a two-week high and triggering a selloff in European equities.
The US military struck Iranian air defense and missile sites early Wednesday after three commercial tankers were hit in the Strait of Hormuz, pushing Brent crude above $78 a barrel and wiping 141 points off the FTSE 100.
"The strikes are intended to impose heavy costs for targeting and attacking commercial shipping crewed by innocent civilians in an international waterway," US Central Command said in a statement, describing the operation as a series of "powerful strikes."
The attacks targeted Iranian air defense systems, coastal surveillance sites, surface-to-air missiles, and launch positions for anti-ship cruise missiles and drones, according to a US official. Iranian state media reported explosions on Qeshm Island and in the port cities of Bandar Abbas and Sirik, where shrapnel from an "enemy projectile" injured several people and set fishing boats ablaze. The US also revoked a temporary sanctions waiver that had authorized Iranian oil sales through Aug. 21, giving Tehran until July 17 to wind down transactions.
The Strait of Hormuz handles about a fifth of the world's traded oil, and the renewed hostilities threaten to choke off a waterway that had partially reopened under a 60-day interim ceasefire signed in June. With indirect talks in Qatar stalled and Trump now calling the ceasefire "over," the path to a permanent settlement — which was supposed to be negotiated within that 60-day window — has effectively collapsed.
The escalation began late Monday when projectiles struck three commercial vessels near the Omani coast. A Qatar-flagged liquefied natural gas tanker, the Al Rekayyat, caught fire after a drone hit its engine room. A Saudi-flagged crude supertanker, the Wedyan, was also damaged. Qatar's Foreign Ministry summoned Iran's deputy ambassador and handed him a protest note, saying it held Tehran "fully legally responsible."
Iran's Foreign Ministry condemned the US strikes as a breach of the interim agreement and warned of "decisive measures" to protect its interests. Deputy Foreign Minister Kazem Gharibabadi said the attacks violated the ceasefire memorandum, which the US and Iran signed June 17 after four months of war.
Oil at Two-Week High, Equities Slide
Brent crude rose more than 3% to a two-week high above $78 a barrel, while West Texas Intermediate climbed above $74. The spike in energy costs hit European equity markets, with London's FTSE 100 falling 141 points, or 1.3%, to 10,524. Airlines and hospitality stocks led the declines on concern that sustained higher fuel costs will squeeze margins.
The last round of US strikes on Iran occurred June 26, when American warplanes hit Iranian drone storage facilities and coastal radar sites after a similar attack on shipping. That exchange did not derail the ceasefire. This time, Trump's declaration that the deal is "over" marks a sharper escalation.
The president made the comments while attending a NATO summit in Ankara, where he criticized European allies — including Germany, France, and Italy — for refusing base access and declining to help reopen the Strait of Hormuz. "Why are we spending hundreds of billions of dollars and they're not there for us?" Trump said.
Khamenei Funeral and Domestic Pressure
The military escalation unfolded as Iran held funeral ceremonies for Supreme Leader Ayatollah Ali Khamenei, who was killed on the first day of the war in February. Hundreds of thousands of mourners gathered in the holy city of Qom, with some carrying placards reading "KILL TRUMP." Khamenei's body was later flown to Najaf, Iraq, for additional ceremonies before burial in Mashhad.
His son, Ayatollah Mojtaba Khamenei, who succeeded him as Supreme Leader, has not appeared publicly since reportedly being wounded in the same airstrike that killed his father.
The last time the US and Iran engaged in sustained tit-for-tat strikes during the 2024-2025 escalation, Brent crude traded above $90 a barrel for six consecutive weeks, and the S&P 500 fell more than 8% over the same period before stabilizing. The current trajectory suggests a similar risk premium may re-emerge if the Strait of Hormuz closes again.
This article is for informational purposes only and does not constitute investment advice.
