The Strait of Hormuz has returned to a wartime state, and the oil market's concerns are no longer just about supply disruptions.

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The US-Iran ceasefire agreement has essentially collapsed, plunging the energy market into a new round of turmoil.

On Tuesday, Iran launched attacks on three oil tankers passing through the Strait of Hormuz. According to CCTV News, the US Central Command posted on the social media platform X, stating that the US military completed a new round of strikes against Iran on July 8, hitting about 90 Iranian military targets.

According to a Thursday report by MarketWatch, analysts from shipping analysis agency Windward Maritime said, the Strait of Hormuz has "returned to a state of full conflict," and the partial passage order that gradually recovered since mid-June has "actually collapsed." Brent crude and WTI crude oil futures both surged sharply on Wednesday, reaching two-week highs.

Trump stated at the NATO summit in Turkey on Wednesday that he does not believe war with Iran will resume, but he had previously publicly declared that the ceasefire agreement had ended. On Tuesday, the US Treasury Department revoked a general license authorizing Iranian oil sales, effectively reinstating sanctions that had been suspended under the temporary agreement framework. Market confidence has taken a severe hit—few now believe the June agreement can evolve into lasting peace.

Passage nearly closed, supply gap continues to widen

Ship traffic through the Strait of Hormuz plummeted on Wednesday. Rob Barnett, Global Head of Commodities at Bloomberg Intelligence, said that even during partial restoration of shipping in recent weeks, actual traffic through the strait was only a fraction of pre-conflict levels.

"I want to remind everyone that we are still very far from a normal state," Barnett said. "The oil market is facing quite severe supply tightness, and inventory levels have fallen sharply compared to the onset of the conflict."

He further pointed out that the market is currently still in a supply gap state. "Unless a truly lasting agreement is reached and ships can freely pass again, the market will continue to expect supply shortages."

Inventory data confirms pressure; gasoline and diesel both in crisis

Data released by the US Energy Information Administration (EIA) on Wednesday showed that for the week ending July 3, US commercial crude oil inventories (excluding strategic petroleum reserves) increased by 3 million barrels, reaching a total of 411.4 million barrels, about 6% lower than the five-year average for the period.

Gasoline inventories further declined from last week, also about 6% below the five-year average; the gap in distillate stocks such as diesel was even greater, about 12% below the five-year average.

This data indicates that under the ongoing suppression of passage through the strait, the buffer space for US domestic energy is quite limited, and the market's ability to withstand any further supply disruptions is weakening.

Even without actual supply cuts, volatility expected to remain high

Energy consulting firm Rystad Energy pointed out in a research report, "Even without persistent physical supply disruptions, uncertainties surrounding ship safety, insurance costs, potential delays, and the risk of further retaliation may continue to push up market volatility in the near term."

When the US-Iran 60-day ceasefire agreement was signed in mid-June, some investors expected that as ships trapped near the Strait of Hormuz gradually reached their destinations, the global oil market might face a temporary oversupply. However, with the collapse of the ceasefire agreement, this expectation has been completely reversed.

The current challenges faced by the market are now not just about the risk of physical supply disruption—geopolitical premiums, rising shipping insurance costs, and additional costs caused by rerouting are becoming persistent structural pressures on the energy market.

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