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US Oil Update: Futures Surge as US Strikes Iran, Trump Declares Truce 'Over'

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Crude futures settled higher in after-hours trading on Wednesday after the US military launched another round of strikes against Iran, and President Trump declared the interim ceasefire with Iran "over," stoking fears of supply disruptions through the Strait of Hormuz.

Front-month West Texas Intermediate crude futures advanced 6.1% to $74.58 per barrel, while Brent futures rallied 7.3% to $79.45/bbl.

On Wednesday, the US Central Command said the US military had launched fresh strikes against Iran, in response to Tehran attacking commercial vessels in or around the Strait. This marks the second straight day of US strikes against Iran.

"At the direction of the Commander in Chief, US Central Command forces have started conducting additional strikes against Iran to further degrade their ability to threaten freedom of navigation in the Strait of Hormuz," Centcom said in a social media post on X.

The latest military assault came hours after Trump said he may no longer be interested in even trying to reach a deal with Iran, after he declared the recent ceasefire agreement between Washington and Tehran "over" amid renewed hostilities in the Middle East.

Earlier on Wednesday, Centcom posted that over 20 naval warships were patrolling waters across the Middle East.

Iranian Foreign Ministry spokesman Esmaeil Baqaei said that the memorandum of understanding between Iran and the US was not based on the "commitment for commitment" mechanism because there was no sign of good faith in the opposing side's behavior.

Soojin Kim, research analyst at MUFG, said that the latest developments are likely to restore part of the geopolitical premium that had largely unwound in recent weeks, though the broader outlook will depend on whether the conflict escalates further or peace talks resume.

Meanwhile, US commercial crude oil inventories increased by 3 million barrels to 411.4 mmbbls in the week ended July 3, the Energy Information Administration said in its weekly report on Wednesday.

Crude inventories are now about 6% below the five-year average for this time of year, the EIA said.

Aegis Hedging strategists said in a Wednesday note that US crude stocks are now at a deficit of 14.70 mmbbls, or -3.4% to last year, and a deficit of 50.40 mmbbls, or -10.9% to the five-year average.

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Market Chatter: Israel Proposes Oil Pipeline Linking Gulf to Europe

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US Treasury Revokes Iran Oil Sales Authorization, Sets July 17 Wind-Down Deadline

The US revoked its general license authorizing certain Iranian oil transactions and allowed a wind-down period through July 17, the Department of the Treasury's Office of Foreign Assets Control said in a statement on Tuesday.The Department revoked the earlier Iran-related General License X and replaced it with General License X1, effective July 7. The new license replaces the June 21 authorization in its entirety.On June 22, OFAC issued Iran General License X, "Authorizing the Production, Delivery and Sale of Crude Oil, Petrochemical Products, and Petroleum Products of Iranian-Origin through August 21, 2026."However, Tuesday's license has revoked this authorization of new transactions involving the production, purchase, loading, sale, delivery, or offloading of Iranian crude oil, petrochemical products, or petroleum products on or after July 7, except where necessary to complete the wind-down.The new license also excludes transactions involving parties in North Korea, Cuba, or the covered and Crimea regions of Ukraine, as well as activities prohibited under other applicable sanctions authorities.The US action followed reports from the British navy-linked United Kingdom Maritime Trade Operations agency that commercial tankers sustained damage from unidentified projectiles in and around the Strait of Hormuz in recent days. Two strikes on tankers in the strait were reported on Tuesday, while another tanker was hit on Monday.General License X1 authorizes transactions ordinarily necessary to wind down activities previously permitted under General License X through 12:01 a.m. Eastern Daylight Time on July 17, provided payments to blocked persons are made into blocked, interest-bearing US accounts.The White House did not immediately respond to' request for comment.Oil markets reacted sharply to the announcement, with Brent crude rising about 5% to $75.58 per barrel and US West Texas Intermediate increasing about 4.7% to $71.80/bbl.

US Oil Update: Futures Surge as US Strikes Iran, Trump Declares Truce 'Over' | FINWIRES