Oil Prices Shrug Off a Third Weekend of US-Iran Strikes

Brent crude jumped more than 4% to $78.97 a barrel on Monday as the United States and Iran traded strikes for a third straight weekend over the Strait of Hormuz. West Texas Intermediate rose 4.03% to $74.31, and Asian markets sold off hard, with South Korea’s Kospi plunging 9% and Japan’s Nikkei 225 falling nearly 2%.

Even so, the jump is a fraction of what this same war produced in March, when Brent surged 51% in a single month. Markets are increasingly treating this conflict’s flare-ups as a recurring cost of doing business. Tanker traffic through the strait, meanwhile, is crawling toward its slowest pace since the fighting began.

Third Weekend of Strikes Leaves the Truce in Tatters

Iran struck the Cyprus-flagged container ship MV GFS Galaxy in the strait on Saturday, prompting the first of two rounds of U.S. retaliation, according to Al Jazeera. U.S. Central Command hit dozens of targets Sunday, using one-way attack sea drones in combat for the first time, alongside fighter aircraft, naval vessels and attack drones.

Iran fired back at American bases across the Gulf. Its Revolutionary Guard said it targeted U.S. facilities in Bahrain and radar sites in Oman.

• Bahrain – sirens sounded for a third time Monday as the kingdom reported incoming fire, its Interior Ministry said.
• Jordan – air defenses shot down four Iranian missiles that entered its airspace, with no injuries or property damage reported.
• Oman – summoned Iran’s ambassador to protest strikes near the waterway, the first such move since the war began, calling the acts irresponsible.
• Qeshm Island – Iran’s Revolutionary Guard said fewer than a dozen projectiles hit military targets on the Persian Gulf’s largest island, with no casualties.

One Iranian sailor, Lieutenant Hamidreza Dehghani, was killed in strikes on the southern port of Jask, Iranian state media reported Sunday, according to CBS News.

Iran’s new supreme leader, Mojtaba Khamenei, who took over after his father’s death in the war’s opening strikes on Feb. 28, broke a long public silence Saturday to vow revenge. “We pledge that we will take revenge for the pure blood of the martyred leader and all the martyrs of these two wars from the criminal and disgraced killers,” he said, according to NBC News.

The exchanges came days after President Trump threatened to “decimate and destroy” Iran if it tried to assassinate him, warning that “1000 Missiles are Locked and Loaded and aimed at the Islamic Republic of Iran.”

A War That Keeps Producing Smaller Shocks

Monday’s jump is the latest swing in a price cycle running since Feb. 28, when the U.S. and Israel launched joint strikes on Iran and Brent traded around $72 a barrel.

The pattern shows up in the spread between those numbers. Prices needed a 51% monthly surge and a naval blockade to reach their wartime peak. They have needed under 5% to revisit levels near $79 each time fighting has resumed since the ceasefire, even with sea drones in use, a sailor killed and an ambassador recalled.

Why Wall Street Isn’t Repricing for Another Shock

The market has adjusted its expectations for how this war behaves.

It appears to be pricing in a new normal where periods of conflict, perhaps we might call them missile skirmishes, occur between periods of relative calm, or unease.

Andy Lipow, president of Lipow Oil Associates, made the point to CNBC on July 9, adding that the market is not pricing in a full closure of Hormuz.

Fabien Yip, a market analyst at IG in Sydney, sees a similar dynamic. “Near-term, the risk premium should keep prices supported, though a repeat of the earlier spike appears unlikely, as demand remains slow to recover while stranded-tanker releases and OPEC+ output quota expansion continue to add barrels to an already oversupplied outlook,” Yip said in a note to clients Monday, according to Al Jazeera.

The reversal in mood is sharp. A month ago, Nikkei and Kospi touched record highs on the ceasefire deal. Chipmaker SK Hynix, which had just listed shares in the U.S., posted a steep slump during an earlier round of strikes this month, a preview of Monday’s rout.

Is the Strait of Hormuz Actually Open?

Both sides claim control of the waterway. U.S. Central Command says it remains open and traffic is flowing under military protection. Iran’s Revolutionary Guard says it shut the strait until American forces leave the region. Tracking data shows some vessels still crossing, just far fewer than before the war.

What We Know:

• CENTCOM says the strait remains open, calling it “an international waterway” that U.S. forces are “positioned and prepared” to keep that way.
• Maritime intelligence firm Windward tracked nine vessels transiting the strait between Saturday and Sunday, four of them flying Iranian flags, according to Al Jazeera.
• Roughly 130 vessels a day used the strait before the war. Just six crossed in one 12-hour window last week, down from 18 to 22 crossings a day earlier this month.

What’s Unconfirmed:

• Iran’s Revolutionary Guard says the strait is “closed until further notice” and will stay shut until U.S. interference ends.
• Whether Sunday’s drone strikes near the waterway, which prompted Oman to summon Iran’s ambassador, damaged the southern route shippers rely on.
• Whether this week’s lull in fighting reflects real de-escalation or another pause before further strikes, sources told Al Jazeera.

Insurers and Shippers Retreat Again

International Maritime Organization Secretary-General Arsenio Dominguez has urged carriers to stay clear. “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,” he said, according to ABC News.

Some vessels are going dark, switching off transponders to hide their positions and further muddying any count of who is actually crossing.

Nikos Petrakakos, managing director of investments at Tufton Investment Management, told CNBC that shipping companies remain wary of sending vessels back through the chokepoint, citing sea mines and elevated war-risk insurance premiums. “Even though there is some more motion going on, in general, we’re nowhere near being back to where it was,” he said.

The July 17 Deadline That Could Reset the Standoff

The U.S. Treasury Department revoked its 60-day waiver on Iranian oil sanctions on July 7, the same day Iran attacked three tankers near the strait. Transactions under that waiver, the decision that first sent Brent surging past $76 a barrel, will no longer be permitted after 12:01 a.m. Eastern time on July 17.

Qatar and Pakistan are working to bring Washington and Tehran back to the negotiating table, officials from both countries have told reporters. The International Energy Agency warned Friday that renewed hostilities threaten to extend the broader energy crisis and said roughly a quarter of the world’s maritime oil trade normally moves through the strait.

The IEA also said world oil demand is on track to fall this year for the first time since 2020, even as the effective closure of Hormuz has cut as much as 14 million barrels a day from global flows. Supply rose 4.1 million barrels a day in June after the memorandum was signed, the agency said, but remained 9.4 million barrels a day below pre-war levels.

Traders now have one more date circled. The sanctions waiver expires at 12:01 a.m. Eastern time on July 17, four days away, closing the window Washington opened last month for Iran to sell its oil legally.

Frequently Asked Questions

Why does the Strait of Hormuz matter so much for oil prices?

About a fifth of the world’s traded oil, and a similar share of its liquefied natural gas, passed through the 33-kilometer-wide waterway before the war, most of it bound for refiners across Asia. There is no pipeline network large enough to replace that volume if the strait stays disrupted.

How much has shipping traffic through the strait actually fallen?

Data and analytics firm Kpler verified 41 crossings on one recent Tuesday, up slightly from 36 the day before, evidence that some traffic keeps moving even amid the dispute over who controls the waterway. Other trackers have logged single-digit daily crossings on the worst days this month.

What changes on July 17?

The U.S. sanctions waiver that let Iran legally sell oil, originally set to run until August 21, expires early instead. The authorization had been viewed by critics as a major U.S. concession to Tehran within the interim deal, and its early cutoff removes that concession four days from now.

How much have oil prices risen since the war began?

Prices are now about 9% higher than they were before the U.S. and Israel launched their initial strikes on Iran in late February, even after falling all the way back to pre-war levels in June following the memorandum of understanding.

Has Trump threatened anything beyond airstrikes?

Yes. He has also raised the possibility of hitting Iranian civilian infrastructure, including power and desalination plants, and of seizing Kharg Island, the terminal that handles about 90% of Iran’s oil exports, though he has not ordered either step.