Market Reaction

On Tuesday oil markets rallied sharply, with Brent crude futures for September delivery climbing 5.3% to $75.79 a barrel and U.S. West Texas Intermediate (WTI) futures for August delivery rising 5.1% to $72.04 a barrel. The price surge was triggered by the U.S. Treasury Department’s Office of Foreign Assets Control revoking the general license that had permitted the production, delivery and sale of Iranian crude, petrochemical and petroleum products.

Geopolitical Trigger

In the same period, the United Kingdom Maritime Trade Operations (UKMTO) reported attacks on three oil tankers in and around the Strait of Hormuz. Two vessels were struck by unknown projectiles and a third was hit by a drone; no casualties were reported. UKMTO subsequently raised the regional threat level from "substantial" to "severe." Qatar identified one of the attacked ships as the Al‑Rekayyat and held Iran fully legally responsible, while Saudi Arabia identified another vessel as the Saudi tanker Vijian and issued a similar condemnation. Although Iran has not publicly claimed responsibility, Axios cited U.S. officials stating that Iran’s military fired on the three commercial ships.

Diplomatic Context

The escalation follows an interim peace agreement signed last month between Washington and Tehran, which had temporarily halted hostilities and reopened the strait. Earlier in June, Iran’s military had attacked ships, prompting retaliatory U.S. airstrikes.

Parallel Developments

At the NATO Summit Defense Industry Forum in Ankara, the alliance announced a $40 billion commitment to counter‑drone capabilities over the next five years, new co‑production initiatives, and a procurement plan for up to five Triton aircraft from Northrop Grumman. U.S. President Donald Trump, attending the summit, criticized NATO for its perceived lack of support during the Iran episode, hinted at a possible sale of Lockheed Martin F‑35 fighter jets to Turkey despite a 2019 congressional ban, and suggested the United States might lift existing sanctions on Turkey.

Energy Outlook

The U.S. Energy Information Administration (EIA) revised its outlook, now expecting the majority of global crude oil production to revert to pre‑Middle‑East‑conflict averages by the end of 2026, with most shut‑in capacity expected to resume in the first quarter of 2027. The agency noted that Brent crude averaged $85 per barrel in June, down $22 from May and $32 from the April 2026 peak. Looking ahead, the EIA forecasts Brent averaging $74 per barrel in the third quarter of 2026 and $65 per barrel in 2027, driven by anticipated inventory accumulation and increasing supply.

Additional Reporting

The article was contributed by Roushni Nair and Scott Kanowsky, with original reporting from Reuters and Axios.