WTI crude jumped more than 5% after Washington reimposed sanctions on Iranian oil and struck back at Iran, with tanker attacks near the Strait of Hormuz reviving war and inflation risk. Traders now weigh that spike against rising OPEC+ output and weaker Chinese demand ahead of today's Fed minutes.
Oil surged as Washington reimposed sanctions on Iranian crude and geopolitical risk returned to the Strait of Hormuz. Prices rose more than 5% after the U.S. cut short a previous authorisation that had allowed Iranian oil sales until August 21, setting a new wind-down deadline of July 17. The move puts war escalation and, by extension, inflation risk back in focus.
Hormuz attacks reignite war risk
Three tankers were reportedly hit by projectiles in or near the Strait of Hormuz. A U.S. official said initial indications suggested Iran had fired at three commercial vessels. Washington then launched fresh strikes on Iran, hitting more than 80 targets, including over 60 small boats linked to the Islamic Revolutionary Guard Corps. Qatar also blamed Iran after a drone struck a Qatari LNG tanker and caused an engine-room fire, while a Saudi-flagged crude tanker was reported damaged off Oman.
Any prolonged disruption can lift energy prices and add pressure on consumers, governments and central banks.
Supply and China cap the rally
Technically, WTI is bouncing from the lower boundary of its descending channel, with a first retest area of 77 to 84 and a move through 84 opening the way toward around 88. But oil probably needs another catalyst to move much higher, because the supply side is not fully supportive of a bigger rally.
OPEC+ agreed to raise output targets by 188,000 bpd from August, on top of similar increases for June and July, and Saudi Arabia reportedly cut its August official selling price for Arab Light crude to Asia. Demand adds to the drag: Chinese crude imports fell to 6.36 million bpd in May, down from 8.10 million bpd in April and the weakest level since October 2016, according to Kpler data. That leaves a two-sided setup, where war escalation supports the bounce but OPEC+ supply and weaker Chinese buying make it harder to argue for a clean bullish trend without another catalyst.
Fed minutes could lean hawkish
The FOMC minutes are scheduled for 18:00 UTC today, covering the June meeting where the Fed held rates at 3.50%-3.75%. Because inflation remained elevated partly on energy supply shocks, the minutes may lean hawkish, or at least not clearly dovish, if policymakers dwelt on sticky inflation and conflict uncertainty.
That reading shows in rates and the dollar. The dollar is holding above its October 2025 lows, with the next resistance to watch around 102. The US 2-year yield is grinding higher along its 50 EMA band, and if it keeps rising after the minutes, markets may read the Fed as higher-for-longer.
Source: Investing.com
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