Oil prices jumped more than 5% on Wednesday, climbing to their highest levels in two weeks after US President Donald Trump declared that the memorandum of understanding aimed at ending the conflict with Iran was "over," reviving fears of disruptions to oil supplies from the Middle East.

Brent crude futures rose $4.27, or 5.76%, to $78.43 a barrel by 11:27 GMT, while US West Texas Intermediate crude futures gained $3.91, or 5.55%, to $74.35 a barrel.

Risks return to the oil market

Both benchmarks climbed to their highest levels since June 22 after closing nearly 3% higher on Tuesday following the US decision to revoke the general license that had allowed the sale of Iranian crude oil.

Trump said on Wednesday that the memorandum of understanding signed with Iran to end the conflict was "over," adding that he no longer wanted any dealings with Tehran.

The agreement, brokered by Pakistan last month, had given both sides 60 days to hold negotiations but came under mounting pressure after the United States carried out fresh strikes against Iran.

"The market is once again being forced to price in the risk that renewed attacks on shipping, or a broader breakdown in US-Iran relations, could delay the normalization of supply flows through the Strait of Hormuz," said Ole Hansen, Head of Commodity Strategy at Saxo Bank.

US Central Command said on Tuesday that the latest US airstrikes were launched in response to Iranian attacks targeting three commercial vessels transiting the Strait of Hormuz. Iran's Revolutionary Guard later announced that it had struck US military sites in Bahrain and Kuwait early on Wednesday.

The latest developments have renewed concerns over oil tanker traffic through the Strait of Hormuz, which handled around one-fifth of global energy supplies before the conflict erupted in late February.

Meanwhile, the spread between prompt Brent contracts and those maturing three months later widened to $2.36 a barrel, the highest since June 16, as the market shifted back into backwardation after remaining in contango through July 6. The move reflects traders' reassessment of near-term supply risks in the Middle East.

Backwardation, where prompt prices trade above longer-dated futures, typically signals tight near-term supplies.

Supply concerns return as tanker traffic slows despite expectations of lower prices in 2026

"Trump's declaration that the memorandum of understanding is over raises the likelihood of the Strait of Hormuz being closed again as the escalation enters a new phase," said Saul Kavonic, Head of Energy Research at MST Marquee.

Vessel-tracking data showed that at least four oil and gas tankers altered course and abandoned attempts to transit the strait as renewed attacks on shipping heightened security concerns.

Following the ceasefire agreement signed by the United States and Iran last month, oil prices retreated to pre-war levels, while traders increased their bearish positions in oil futures, betting on further price declines.

Since the conflict began, several countries have drawn on their strategic oil reserves to offset supply shortages.

Separately, HSBC lowered its forecast for Brent crude to average $80 a barrel in 2026, down from a previous estimate of $95, citing expectations that oil exports from the Gulf region will return to normal by the end of September.

Meanwhile, trade sources said on Wednesday that China had eased restrictions on refined fuel exports for the remainder of July and had also allowed one independent refiner to resume shipments after a four-month suspension.

The US dollar steadied near a one-week high on Wednesday after President Donald Trump declared that the temporary memorandum of understanding with Iran aimed at ending the conflict between the two countries had "come to an end," while the New Zealand dollar jumped following the central bank's decision to raise interest rates.

The US Dollar Index, which tracks the greenback against a basket of six major currencies, was little changed at 101.17, remaining close to its highest level since July 2 as investors continued to favor the safe-haven currency amid heightened geopolitical uncertainty.

Geopolitical tensions support the US dollar

Jane Foley, Head of FX Strategy at Rabobank, said the US dollar had responded to the latest developments, although markets have become accustomed to treating Trump's remarks with a degree of caution.

"These comments may be intended to bring the other side back to the negotiating table, but they are nevertheless likely to increase market anxiety," she said.

In energy markets, Brent crude futures climbed 6.24% to $78.82 per barrel, extending gains for a second consecutive session.

Trump's comments came after Iran's Revolutionary Guard announced on Wednesday that it had targeted US military sites in Bahrain and Kuwait, following a wave of US airstrikes against Iran in response to attacks on oil tankers in the Strait of Hormuz.

New Zealand rate hike and Fed minutes in focus

Meanwhile, the New Zealand dollar rose 0.26% to US$0.5691 after trimming part of its earlier gains, following the Reserve Bank of New Zealand's decision to raise its benchmark interest rate by 25 basis points to 2.50%, in line with broad market expectations, as policymakers continued efforts to contain inflationary pressures.

The central bank said that "further removal of monetary stimulus is likely to be required" to bring inflation under control.

Westpac analysts wrote in a research note that one of the main reasons behind the rate hike was concern that financial conditions would have become more accommodative had the official cash rate remained unchanged.

Later on Wednesday, investors will turn their attention to the minutes of the Federal Reserve's June policy meeting, the first held under new Fed Chair Kevin Warsh.

Francesco Pesole, FX strategist at ING, said the minutes should provide a clearer picture of how seriously policymakers are considering additional interest rate hikes.

"Based on officials' remarks following the meeting, we see limited scope for a dovish surprise and expect the minutes to reinforce the Fed's hawkish message, providing further support for the US dollar," he said.

However, Pesole added that he does not expect a major breakout for the greenback, as markets may be reluctant to significantly increase rate hike expectations following last week's weaker-than-expected US employment data.

Other currencies

The US dollar rose 0.24% against the Japanese yen to ¥162.48, extending gains for a fourth consecutive session as traders continued to monitor the possibility of intervention by Japanese authorities.

The euro was little changed at $1.1405, while sterling slipped 0.1% to $1.3334.

Gold prices fell in European trading on Wednesday, extending losses for a third consecutive session under pressure from a stronger US dollar and rising oil prices, as military tensions between the United States and Iran escalated again and US President Donald Trump declared that the ceasefire with Tehran was over.

Later today, markets are awaiting the minutes from the Federal Reserve’s first monetary policy meeting under Kevin Warsh, which are expected to provide more decisive clues about the future path of US monetary policy.

The Price

Gold prices today: Gold fell 1.35% to $4,050.48 per ounce from an opening level of $4,106.09, after touching an intraday high of $4,134.05.

At Tuesday’s settlement, gold lost 1.45%, marking its second consecutive daily decline as profit-taking continued from a two-week high of $4,203.06 per ounce.

In addition to profit-taking, gold prices came under pressure from a stronger US dollar and rising global oil prices.

US dollar

The US Dollar Index rose 0.1% on Wednesday, extending gains for a second consecutive session and reflecting continued strength in the US currency against a basket of major and minor currencies.

The dollar gained support from renewed demand as a preferred safe-haven asset, especially as military tensions between the United States and Iran intensified and the risk of a ceasefire collapse increased.

Global oil prices

Oil prices rose around 4.0% on Wednesday, extending gains for a second straight session and reaching their highest level in two weeks, driven by renewed fears of supply disruptions through the Strait of Hormuz and potential interruptions to maritime traffic.

Iran conflict developments

• The United States launched a large wave of intensive airstrikes targeting more than 80 military sites inside Iran, including locations in Bandar Abbas, Sirik, and Qeshm Island in the country’s south.

• The heavy US response came after Iran’s Revolutionary Guard attacked three commercial oil tankers, including a Qatari gas carrier and another vessel flying the Saudi flag, while they were transiting the Strait of Hormuz.

• Tehran carried out the missile attacks on the grounds that the vessels had not followed “Iran-approved shipping routes” and had attempted to use lanes closer to Oman to avoid transit fees Iran is seeking to impose.

• The US Treasury officially revoked a temporary license that had allowed Iran to produce and sell crude oil, describing the maritime attacks as a clear violation of the memorandum of understanding signed on June 17.

• Tehran vowed a “decisive and powerful response” to the US bombardment, while Iranian Foreign Minister Abbas Araghchi said there could be no final negotiations as long as threats and military strikes continued.

• Pakistan had been scheduled to host a new round of technical talks between the United States and Iran on July 11 to discuss three complex issues: sanctions on Tehran, the release of frozen funds, and the nuclear file.

• US President Donald Trump said he believed the ceasefire with Iran was over and that the memorandum of understanding with Tehran had ended.

US interest rates

• Amid higher oil prices, CME FedWatch pricing showed that the probability of the Federal Reserve leaving interest rates unchanged at its July meeting fell from 75% to 65%, while the probability of a 25-basis-point rate hike rose from 25% to 35%.

• For December, the probability of unchanged rates fell from 23% to 15%, while the probability of a 25-basis-point rate hike rose from 77% to 85%.

• Later today, the minutes from the Federal Reserve’s first policy meeting under new Chair Kevin Warsh will be released, with investors expecting clearer signals on the direction of US interest rates this year.

Gold outlook

Market strategist Ilya Spivak said that mild concerns over inflation dominated the past 24 hours. As a result, bond prices declined, the dollar rose slightly, and gold moved lower.

SPDR Gold Trust

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 0.28 metric tons on Tuesday, bringing total holdings down to 1,002.51 metric tons.

The euro fell against a basket of major currencies in European trading on Wednesday, extending its losses for a second consecutive session against the US dollar as investors sought the greenback as a preferred safe-haven asset amid renewed military tensions between the United States and Iran in the Strait of Hormuz.

The renewed rise in global oil prices has also revived concerns about inflationary pressures on central banks, reinforcing expectations that interest rates could remain higher or increase further in the coming months.

The Price

Euro today: The euro fell 0.1% against the US dollar to $1.1399, down from the session opening level of $1.1412. It recorded an intraday low of $1.1413.

The euro closed Tuesday down 0.25% against the US dollar, its first daily decline in four sessions, as traders continued profit-taking following its rally to a two-week high of $1.1473.

US dollar

The US Dollar Index rose 0.1% on Wednesday, extending gains for a second straight session as the US currency strengthened against a basket of major and minor currencies.

The dollar continued to benefit from safe-haven demand following the renewed military confrontation between the United States and Iran, raising concerns that the ceasefire agreement could collapse and peace negotiations could come to an end.

Later today, markets will closely watch the minutes of the Federal Reserve's first monetary policy meeting under Chairman Kevin Warsh, which are expected to provide fresh clues about the likelihood of further US interest rate hikes this year.

Global oil prices

Oil prices climbed around 0.5% on Wednesday, extending gains for a second consecutive day and reaching their highest level in two weeks amid renewed concerns over potential supply disruptions through the Strait of Hormuz and the risk of further interruptions to maritime traffic.

Iran conflict developments

• The United States launched a large-scale wave of airstrikes targeting more than 80 military sites across Iran, including locations in Bandar Abbas, Sirik, and Qeshm Island in the country's south.

• The strikes came after Iran's Islamic Revolutionary Guard Corps attacked three commercial oil tankers, including a Qatari LNG carrier and another vessel flying the Saudi flag, while they were transiting the Strait of Hormuz.

• Tehran claimed the vessels had failed to follow "Iran-approved shipping routes" and attempted to use lanes closer to Oman to avoid transit fees that Iran has been seeking to impose.

• The US Treasury officially revoked a temporary license that had allowed Iran to produce and export crude oil, describing the maritime attacks as a clear violation of the memorandum of understanding signed on June 17.

• Iran vowed a "decisive and powerful response" to the US strikes, while Foreign Minister Abbas Araghchi said no final negotiations could take place as long as threats and military attacks continued.

• Pakistan had been scheduled to host another round of technical talks between the United States and Iran on July 11 to discuss sanctions relief, the release of frozen assets, and Iran's nuclear program.

• US President Donald Trump reiterated that Washington would either reach a final agreement with Iran or "finish the job" through comprehensive military action.

European interest rates

• European Central Bank President Christine Lagarde said last week at the ECB Forum in Sintra that risks to inflation and economic growth in the euro area have become more balanced than they were a few weeks ago following the recent decline in oil prices.

• Money markets are currently pricing the probability of a 25-basis-point ECB rate hike in July at around 10%.

• Investors will continue monitoring upcoming eurozone data on inflation, employment, and economic growth to reassess the outlook for European monetary policy.