Oil Prices Surge as Strait of Hormuz Closure Halts Supply

London-based September ICE Brent surged $6 to reach $80.15/bbl, while August NYMEX West Texas Intermediate climbed $5.25 to $75.70/bbl. The market reaction was even more pronounced in refined products; August ULSD contracts jumped roughly 13%, gaining 44.65cts to hit $3.7385/gal. These levels push both oil benchmarks well past their February 27 settlements, marking a decisive reversal from previous stability.

The escalation follows a series of U.S. military strikes on over 80 targets in Iran throughout Tuesday. Simultaneously, the Treasury Department moved to revoke waivers that previously permitted Iranian oil sales on the open market. According to Rystad Energy, tanker traffic through the critical waterway has effectively ceased, forcing traders to price in the near-total loss of this supply route. With the 60-day truce now considered void, analysts warn that the convergence of halted shipments and peak summer fuel demand creates a precarious environment for global energy markets, further compounded by Energy Information Administration data showing broad declines across crude, gasoline, and distillate inventories.