Iran-US Ceasefire Under Strain: Why Oil Prices Are Rising Again as Tensions Flare

It's worth noting that Trump stopped short of declaring the war restarted, saying he would leave the matter to his negotiators — but the diplomatic path that had been gaining momentum since June now looks far less certain.

Here's the full picture: what's happened since the original ceasefire, how markets have reacted through each phase, and what traders are watching next.

Update (8 July 2026): Iran has resumed attacks on Gulf neighbours, including reported strikes against Bahrain and Kuwait, after the US retaliated for Tuesday's attacks on shipping in the Strait of Hormuz. Trump commented from the Nato summit in Ankara that the ceasefire is over, while also indicating negotiators would continue working the issue. European equity indices have fallen more than 1.5%, and oil majors BP and Shell are among the top FTSE 100 gainers as crude prices spike.

Table of contents

• 1. What happened?
• 2. How did markets react?
• 3. What's still uncertain
• 4. What this means for traders
• 5. What traders are watching next

What happened?

The US-Iran conflict has moved through several distinct phases since late February, when US and Israeli forces first attacked Iran and Tehran responded by effectively closing the Strait of Hormuz — the narrow waterway carrying roughly 20% of the world's daily oil supply.

Oil prices surged through March, and on 7 April Trump announced a two-week suspension of attacks on Iranian infrastructure, conditional on Iran reopening the Strait. That initial truce proved fragile, and tensions continued through the spring, with Brent peaking above $126 a barrel in late April.

A more durable step came on 17 June, when the US and Iran signed a memorandum of understanding covering safe passage through the Strait. In the weeks that followed, as mediators including Qatar reported progress in talks and Trump spoke positively about Iran's denuclearisation, oil prices fell steadily — dropping to around $70–71 a barrel by early July, roughly back to where they stood before the war began.

That fragile calm was complicated further by the death of Iran's Supreme Leader Ali Khamenei, with state funeral ceremonies running until 9 July. Then, this week, attacks on commercial vessels in the Strait triggered US retaliatory strikes, Iranian strikes on Bahrain and Kuwait, and Trump's comment that the ceasefire is over — bringing renewed uncertainty just as the situation appeared to be stabilising.

How did markets react?

Each phase of this conflict has produced sharp, immediate market moves.

The April ceasefire saw oil collapse over 15% in hours, with equities surging across three continents and gold and bonds holding firm — signalling a relief rally rather than full risk-on sentiment.

The June-to-July de-escalation saw Brent grind lower to pre-war levels near $70, as shipping insurers and traders gained confidence that hostilities were largely winding down.

This week's flare-up has reversed part of that move. Brent is up more than 6% and trading above $78 a barrel. European indices — the FTSE 100, DAX and CAC 40 — are all down more than 1.5%. Oil majors BP and Shell are leading gainers on the FTSE 100, with BP up more than 3%. Global bond yields are rising, particularly in Europe, with the UK and Italian 2-year yields both up close to 10 basis points, as markets recalibrate inflation and rate-hike expectations. Gold, meanwhile, is down nearly 2% as a stronger dollar and rising yields weigh on the metal, pulling miners like Fresnillo and Antofagasta lower too.

What's still uncertain

Markets have now been through this cycle more than once, and analysts remain cautious about reading any single move as decisive.

Is the ceasefire actually over, or just under strain? Trump's comments stopped short of declaring war resumed, and he indicated negotiators would keep working the issue. That ambiguity is itself a source of volatility — markets are pricing risk without a clear signal of direction.

The Strait of Hormuz remains the pressure point. Even after the June MoU, shipping traffic through the Strait stayed well below pre-war levels, and Iran has repeatedly disputed exclusive control over passage. This week's vessel attacks show the route is still contested despite the diplomatic progress made over the summer.

"TACO" thinking is back in play. The market's shorthand for scepticism about follow-through on Trump's escalation threats — dubbed "Trump Always Chickens Out" by some analysts — is being tested again. Whether this week marks a genuine reversal or another cycle of threat-and-retreat is the question shaping short-term positioning.

OPEC's response matters too. With oil having fallen below fiscal breakeven levels for some members earlier this summer, this weekend's OPEC+ meeting on output levels will be watched closely for signs of how the cartel is managing the renewed volatility.

What this means for traders

This story is a clear illustration of why geopolitical risk needs to sit at the centre of any trading approach to energy and index markets right now. Each phase of this conflict — the April ceasefire, the June MoU, and this week's escalation — has moved oil prices by mid-to-high single digits or more within hours, alongside equity indices, gold, bonds and currencies.

For traders, this kind of repeated, multi-asset volatility creates both opportunity and risk. Instruments that allow exposure to price movements in either direction — including oil, global indices, gold and currencies — become particularly relevant when headlines are driving markets at this scale and speed.

CFDs are commonly used to gain exposure to these price movements without owning the underlying asset, allowing positions on both rising and falling markets. You can learn more about how to trade oil and index price movements with CFDs.

It's worth repeating that volatility cuts both ways. Fast-moving markets can move against a position quickly, and leverage amplifies both gains and losses. Given how often the narrative has shifted this year — ceasefire, MoU, funeral, flare-up — understanding the immediate macro trigger behind any given move matters as much as the instrument itself.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

What traders are watching next

How does Iran respond? Tehran's reaction to the US retaliatory strikes — and whether it further escalates against Gulf neighbours or pulls back — will likely set the tone for the next few sessions.

Does the Strait see renewed disruption? A second US naval response or a broader blockade would mark a genuine escalation and could push Brent back toward $100, a threshold that would also revive discussion of additional central bank rate hikes.

What comes out of this weekend's OPEC+ meeting? Output decisions will shape whether the cartel leans into defending price levels or reclaiming market share amid the renewed uncertainty.

Do talks resume, or stall for good? Trump's own framing — leaving the issue to negotiators rather than declaring war outright — suggests the diplomatic track isn't dead, but confidence in a lasting resolution has clearly taken a hit after the progress made through June.

Markets have cycled through relief and renewed risk more than once this year. Whether this week marks a short-lived flare-up or a genuine breakdown in the ceasefire will determine whether recent gains in oil prices hold — or extend further.