Key Takeaways:
President Donald Trump declared the US-Iran ceasefire "over" and warned of fresh strikes, sending crude prices surging as tankers divert from the Strait of Hormuz.
Trump said the interim ceasefire with Iran was "over" and threatened additional strikes Wednesday night, collapsing a fragile truce as at least four oil tankers reversed course rather than transit the Strait of Hormuz.
"I'll give a little warning: We're going to hit them hard tonight," Trump told reporters at the NATO summit in Ankara, Turkey, before a meeting with Ukrainian President Volodymyr Zelensky. "I don't know if we're going to have a deal. We may just do it without a deal."
The escalation followed a night of tit-for-tat strikes. U.S. Central Command said it hit more than 80 targets, including Iranian air defense systems, coastal radar sites, anti-ship missile batteries and more than 60 small boats belonging to the Islamic Revolutionary Guard Corps near the strait. Iran retaliated by targeting U.S. military sites in Bahrain and Kuwait, according to Iranian state media. The U.S. also revoked a sanctions waiver that had permitted Tehran to sell oil and petrochemicals under the memorandum of understanding signed earlier this year.
The Strait of Hormuz handles about a fifth of the world's oil trade, making any disruption a direct threat to global supply. Shipping data showed at least four crude and gas tankers had turned back rather than attempt the waterway, pushing crude prices sharply higher. The last time the strait faced a sustained blockade threat — during the 2019 tanker attacks — Brent crude spiked more than 15 percent over six weeks.
The collapse of the truce marks the most serious escalation since the war's opening salvo on Feb. 28, when Iran's late supreme leader, Ayatollah Ali Khamenei, was killed. Talks to convert the interim MOU into a permanent deal had been expected to resume after Khamenei's funeral this week.
Trump, speaking from the NATO summit in Ankara, did not explicitly declare a return to full-scale war, leaving ambiguity about whether negotiations could still continue. "I don't know if we're going to have a deal," he said. "We may just do it without a deal."
NATO Allies on Edge
The confrontation overshadowed the NATO summit, where Trump pressed allies on defense spending and criticized several member states for refusing to allow U.S. forces to use their bases for strikes on Iran. He singled out Britain, France, Germany, Italy and Spain for failing to contribute, and called for cutting off all trade with Spain, calling it a "wasted cause."
The Pentagon has announced a six-month review of the U.S. military presence in Europe, adding to allied anxiety about Washington's long-term commitment to the alliance. The 2026 U.S. defense budget stands at $901 billion, or about 3.3 percent of gross domestic product — a benchmark Trump has urged other members to match.
Market Fallout
The renewed hostilities drove a flight to safe-haven assets. Gold prices rose as investors sought protection from geopolitical risk, while equity markets faced selling pressure. The VIX, Wall Street's fear gauge, climbed as traders priced in the risk of a prolonged confrontation that could disrupt energy supplies and push inflation higher.
The last time the U.S. and Iran engaged in direct strikes — following the January 2020 killing of Qassem Soleimani — Brent crude briefly topped $70 a barrel before retreating within weeks. Analysts said the current escalation carries greater risk given the direct targeting of commercial shipping in the strait.
This article is for informational purposes only and does not constitute investment advice.
