Trump Called the Iran Ceasefire Over - Oil Jumped 7 Percent and Gas Prices Are Climbing Again

Trump Declares Ceasefire Over at NATO Summit in Turkey

President Trump declared the U.S.-Iran ceasefire over on Wednesday, July 8, speaking at the sidelines of the NATO summit in Ankara, Turkey. His comments followed a second consecutive day of U.S. airstrikes against Iranian targets in the Strait of Hormuz, launched in response to attacks on three commercial vessels in the waterway.

Asked directly about the status of the ceasefire that had been announced in mid-June, Trump told reporters: “For me, I think it’s over. It’s just a waste of time dealing with them.” The ceasefire had been in effect since June 17, allowing oil tanker traffic through the Strait to resume and pushing gasoline prices below $4 a gallon for the first time since the conflict began in February.

Oil Markets React: Crude Jumps 7 Percent in a Single Session

The market reaction was immediate. West Texas Intermediate crude surged 5.8 percent to close at $73.52 per barrel on Wednesday. Brent crude, the international benchmark, jumped 5.2 percent to settle at $78.02. Both benchmarks had been trading around $69 and $72 respectively at the start of the week.

The Dow Jones Industrial Average fell more than 800 points, or 1.5 percent, on the same day. The selloff came just two days after the index had hit a record high. A market gauge tracking Federal Reserve rate expectations - the CME FedWatch tool - showed investors now seeing a better than one-in-three chance the Fed would raise interest rates this month, up from about one-in-four the day before the ceasefire collapsed.

What This Means for Gas Prices at the Pump

The average cost of a gallon of regular unleaded in the United States stood at $3.796 on Wednesday, according to AAA - down more than a dollar from the wartime peak reached earlier this year when the Strait of Hormuz was effectively closed. That relief came from the ceasefire, which allowed Iranian oil to flow again and removed the naval blockade that had been choking global supply.

With the ceasefire now collapsed, analysts expect prices to rise. The lag between crude oil cost increases and pump prices is typically four to six weeks, as refineries are buying crude a month or more in advance. One energy analyst told NPR that the current strikes were relatively targeted - hitting Iranian naval assets rather than energy infrastructure - and that a full return to wartime price levels was not yet assured. But further escalation could change that quickly.

The Strait of Hormuz and Why It Moves American Prices

About one-fifth of the world’s oil supply passes through the Strait of Hormuz, a narrow waterway between Iran and the Arabian Peninsula. For much of the conflict that began in February, both the U.S. and Iran had maintained competing blockades in or near the strait, dramatically constraining global supply and driving crude prices above $100 per barrel at the peak.

The ceasefire had allowed that supply to recover. Crude prices had fallen back to pre-war levels by early July, contributing directly to lower gasoline and diesel costs for American consumers. The collapse of the ceasefire places that supply recovery in question again, particularly if Iran moves to restrict tanker traffic as it did during the earlier phase of the conflict.

Where Prices Stand and What Comes Next

Iran’s foreign ministry labeled the U.S. airstrikes a “gross violation” of the June agreement, according to reporting by CNBC. The U.S.-led Joint Maritime Information Center raised its threat assessment for ships transiting the Hormuz waterway to “severe.” Both governments were exchanging public statements while military operations continued.

AAA said retail gasoline prices rose less than a penny per gallon overnight following Trump’s announcement - a muted initial reaction that analysts interpreted as the market not yet pricing in a full return to sustained conflict. Whether that changes depends on whether the U.S. and Iran escalate further or return to negotiations. For now, the period of relative relief at the pump that began in late June appears to be over.

References: CNBC | NPR | The Hill