Background: what happened in the months before the ceasefire broke down?
To understand why this week’s events matter so much, you need to start at the beginning of the conflict.
On 28 February 2026, Israel and the United States launched coordinated strikes against Iran, targeting its nuclear programme and ballistic missile infrastructure. Iran responded by weaponising the Strait of Hormuz — the 33-kilometre-wide waterway through which approximately 20% of globally traded oil and significant volumes of liquefied natural gas (LNG) normally flow. The International Energy Agency (IEA) characterised the resulting supply disruption as the “largest in the history of the global oil market,” and its head described it as “the greatest global energy security challenge in history.” Brent crude prices surged 10–13% to around $80–82 per barrel within days of the initial strikes.
A fragile ceasefire appeared to be holding after April 2026, but collapsed in early July when Washington launched its largest military operation since the truce, striking about 90 military and strategic targets across Iran while Tehran retaliated with missile and drone attacks targeting US interests in the Gulf. NPR
What exactly broke the truce
The June 17 memorandum of understanding (MOU) — signed by the US and Iranian presidents — was intended to formally end the conflict within 60 days, with Iran agreeing to provide safe passage to commercial shipping “with no charge” during the demining window. What it left unresolved was who controls the Strait long-term. Iran moved quickly to fill that gap, establishing the Persian Gulf Strait Authority and signalling it would charge fees for passage — a position the US had flatly rejected.
Trump on Monday cast his much-touted memorandum of understanding with Iran as a “test” that he would have preferred to skip, saying: “But you know what? It was sort of a test, and they weren’t there. They didn’t honor the test.” Wikipedia
The renewed flareup followed attacks on at least three commercial vessels transiting Hormuz which the US and its Gulf allies blamed on Iran. The latest wave of US strikes targeted facilities linked to Iran’s Islamic Revolutionary Guard Corps (IRGC), including an aerospace site in Bushehr, port infrastructure in Chabahar — Iran’s only ocean-facing commercial port, which was struck for the first time since the ceasefire — transportation links in Golestan province and facilities near Iranshahr Airport in southeastern Iran. NPR
The market response — immediate and sharp
Iranian missiles hit two UAE tankers in the Strait of Hormuz, killing one crew member. Brent crude, the global oil benchmark, soared 9.59% to settle at $83.30 per barrel, its highest settlement level since June 12, posting its biggest single-day percentage gain in over six years. Global oil prices surged more than 9% on the news of the resumed US naval blockade. Wikipedia
Crude oil prices jumped and stock prices fell after President Trump declared an end to the fragile ceasefire. The Dow Jones Industrial Average tumbled more than 800 points, or 1.5%, after hitting a record high just two days earlier. A market gauge — the CME FedWatch tracking tool — suggests investors now see a better than 1-in-3 chance that the Fed will raise interest rates this month, up from about a 1-in-4 chance on Tuesday, before the ceasefire broke down. CNN
Oil topped $87 a barrel, and gasoline, diesel and jet fuel prices rebounded even more sharply as hostilities resumed. The threat of supply disruptions goes far beyond oil — with both sides digging in, a prolonged conflict risks reigniting inflation. Wikipedia
The insider trading dimension — a serious and unresolved concern
One of the most troubling threads running through this entire conflict’s market history is the pattern of suspicious pre-announcement trading. A Financial Times investigation found that $580 million in bets on falling oil prices had been placed just 15 minutes before Trump published his statement postponing attacks on Iran for talks in March 2026. A second suspicious series of bets worth $950 million on falling oil prices occurred on 7 April 2026, again shortly before Trump announced a two-week ceasefire and the opening of the Strait. A third series of suspicious bets worth an estimated $750 million were placed 20 minutes before Iran’s foreign minister announced the Strait was open for the rest of the ceasefire. These are now the subject of formal investigations by financial regulators. Bloomberg
The supply destruction runs deeper than the headline price
The 2026 conflict has led to what the IEA characterised as the “largest supply disruption in the history of the global oil market.” The conflict echoed the 1970s energy crisis through acute supply shortages, currency volatility, inflation and heightened risks of stagflation and recession. Arab economists, including Qatar’s Energy Minister Al-Kaabi, warned that Gulf energy exports may halt if war continues, with the continued fighting potentially driving oil prices to $150 per barrel and gas prices to $40 per million thermal units — figures that could lead to the “collapse of world economies” in the long term. Bloomberg
The conflict caused the restriction of nearly all traffic through the Strait of Hormuz. Iran’s closure of the Strait disrupted 20% of global oil supplies and significant LNG volumes. China, India, Japan and South Korea account for 75% of oil and 59% of LNG exports from the region. QatarEnergy declared force majeure on its contracts with buyers. The Food Policy Institute warned of long-term increases in food prices due to disruption in fuel and fertiliser markets — the Strait is central to over 30% of global urea exports, and much of the cost of producing corn and wheat lies in the cost of fertiliser. Wikipedia
The toll question — and Trump’s extraordinary U-turn on tolls
Trump on Monday suggested the US would charge a 20% toll for safe passage through the Strait of Hormuz — an extraordinary reversal, given that just weeks earlier his Secretary of State Marco Rubio had repeatedly rebuffed the notion of tolling for the critical waterway and described it as “not even workable.” “If you’re paying someone to go — I don’t care if you call it a fee or a toll or a donation; it’s a toll,” Rubio had said of Iran’s version of the same idea. Trump subsequently backed away from imposing the 20% charge. Wikipedia
The inflation and rate feedback loop
The resumption of attacks renews the prospect of inflationary pressure after a month of falling gasoline prices. The Trump administration is also preparing for a new round of global tariffs, which could put more upward pressure on import prices in the second half of the year. The IMF had already downgraded its forecast for economic growth to 3% for 2026, down from 3.5% last year, even before the latest attacks. CNN
“Until something changes with the status of the Strait, we believe the bias remains for higher oil prices and, in turn, higher expected inflation and interest rates, and episodes of equity price volatility,” said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute. Wikipedia
What to watch next
Three variables dominate the immediate outlook: whether the US naval blockade hardens into a prolonged strategic posture or serves as leverage for a renewed negotiation; whether Iranian retaliatory capability — already demonstrated against Bahrain, Jordan, and UAE tankers in the past week — escalates further into Gulf Cooperation Council (GCC) infrastructure; and whether the Fed, already watching inflation at a three-year high of 4.2%, interprets sustained energy price pressure as requiring an active rate response at its 28–29 July meeting. As the Wells Fargo analyst’s note made clear, until the Strait situation resolves, equity, oil, and fixed-income markets are all structurally biased toward volatility rather than calm.
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