Trump declares Iran ceasefire over as oil surges past $80 on fresh strikes

The collapse of the US-Iran ceasefire framework threatens to embed a permanent risk premium into global oil markets as the Strait of Hormuz becomes a chronic flashpoint.

President Donald Trump declared the 60-day ceasefire with Iran "over" on Wednesday after the US military struck roughly 90 Iranian coastal targets, triggering a 6% surge in crude prices to nearly $80 a barrel and a fresh wave of tit-for-tat attacks across the Gulf.

"The ceasefire framework underpinning the region's recovery is unravelling," said Elena Fischer, geopolitical risk analyst at Edgen. "Neither side appears willing to return to all-out war, but the conditions for a permanent crisis of unpredictable disruptions are now firmly in place."

The US Central Command said it hit air defense systems, coastal surveillance facilities, missile and drone storage sites, and military logistics infrastructure along Iran's coastline. Tehran retaliated with drone attacks on Patriot missile systems in Kuwait, an early warning satellite station in Qatar, and US military fuel tanks in Bahrain — the most serious violation of the June 17 memorandum of understanding since it was signed.

Crude oil jumped to a two-week high of nearly $80 a barrel, reflecting growing fears that the fragile recovery in Gulf energy flows may be short-lived. The Strait of Hormuz carries about a fifth of the world's oil supply, and tanker traffic through the waterway has become increasingly unpredictable since the conflict began.

A chronic supply chain dilemma

The uncertainty surrounding transit through Hormuz is reshaping energy trade dynamics across Asia, which before the war accounted for roughly 80% of Gulf oil and gas exports. Buyers are increasingly seeking alternative suppliers in the US, Brazil, and West Africa, even at higher costs, rather than risk delayed or disrupted deliveries from the Gulf.

For Gulf producers, the consequences are severe. The disruption threatens to undermine cash flows at a time when state finances have already been strained by months of conflict. Countries like Kuwait and Qatar, which have few alternative export routes bypassing the strait, face the most acute pressure. Gulf producers are attempting to restart about 11 million barrels per day of production that was shut in during the Hormuz blockade — a process now thrown into doubt.

The last time a comparable disruption threatened the strait, during the 2019 tanker attacks, oil prices spiked roughly 15% within days before stabilizing. The current standoff carries greater structural risk given the direct military engagement between Washington and Tehran.

What comes next

Trump, speaking at the NATO summit in Ankara, described Iran's leadership as "scum" and said the ceasefire was effectively finished. "As far as I'm concerned, it's over," he said, while reiterating that "Iran cannot have a nuclear weapon." The administration's position leaves little room for a diplomatic off-ramp in the near term.

Iran's military defenses remain weakened after months of intensive bombardment, suggesting the government will seek time to regroup rather than escalate to full-scale war. Yet the standoff over the strait creates conditions for repeated miscalculations. Even if both sides avoid direct war, the risk of periodic disruptions to one of the world's most important energy arteries is likely to persist for the foreseeable future.

For energy markets, the implication is clear: the era of uninterrupted Gulf oil flows has ended, and crude prices will need to embed a higher geopolitical risk premium to reflect the new reality.

This article is for informational purposes only and does not constitute investment advice.