Oil jumps after settlement as US revokes general license for Iran oil sales

By Nicole Jao

NEW YORK, July 7 (Reuters) - Oil prices settled 3% higher on Tuesday and then extended gains post-settlement, after Iran attacked three commercial vessels in the Strait of Hormuz and the U.S. revoked the general license authorizing sale of Iranian crude and later launched new strikes against Iran. 

Brent crude futures settled up $2.17, or 3.01%, to $74.16 a barrel, while U.S. West Texas Intermediate crude rose $1.89, or 2.76%, to $70.44 a barrel.

In post-settlement trade, the global benchmark climbed $1.72 to $75.88 and WTI jumped $1.76 to $72.20 at 4:59 p.m. ET (2026 GMT) after the U.S. revoked a general license that authorized the sale of Iranian oil. Both benchmarks were up more than 5% from the previous day's settlement prices.

The U.S. move came after Iranian attacks on three commercial vessels crossing the Strait of Hormuz.

The U.S. military launched a series of strikes against Iran in response to the Iranian attacks, U.S. Central Command said.

"Obviously today is the next level of breakaway from the memorandum of understanding," said Bob Yawger, director of energy futures at Mizuho, adding it was unclear whether Iran's actions were aimed at exerting authority over the Strait of Hormuz or were primarily a show of strength during mourning ceremonies for the slain Supreme Leader Ayatollah Ali Khamenei.

In June, the U.S. and Iran signed a memorandum of understanding aiming to end the Iran war and reopen the Strait of Hormuz.

Yawger said the U.S. decision to revoke the oil license was a signal that Iran had gone too far but added he did not expect the move to have a lasting impact on Tehran's ability to export crude or on the prospects for a broader agreement. "I don't think it's in either side's interest not to get a deal done," he said.

"This shows just how fragile the ceasefire actually is. Further attacks could sporadically appear in the coming months and this will further add to the volatility," said Ajay Parmar, director of energy and refining at ICIS. "Just one disagreeable message from one side could bring anger to the other, and remember if Iran merely threatens to close the Strait of Hormuz again, prices will spike considerably. As such, we firmly believe that volatility really is here to stay."

"Renewed tensions in the Middle East and concerns over the vessel attacks could drag lower oil exports from the Middle East," UBS analyst Giovanni Staunovo said.

Talks to reach a final deal between Tehran and Washington will not take place if U.S. threats continue, Iran's foreign minister said on Tuesday, following U.S. President Donald Trump's threat to "finish the job" unless a deal is done.

Investors are monitoring talks between the U.S. and Iran and their implications for shipping through the Strait of Hormuz, which prior to the beginning of the Iran war carried a fifth of the world’s daily supply of oil and LNG.

Also on Tuesday, Kyiv's military said Ukrainian drones struck eight tankers from Russia's "shadow fleet" of aging vessels used to bypass sanctions that were delivering fuel to Crimea overnight.

Market sources citing data from the American Petroleum Institute said on Tuesday that the U.S. had drawn down 399,000 barrels of crude oil inventories last week. [API/S]

The U.S. Energy Information Administration will release its own storage reports on Wednesday. [EIA/S]

(Reporting by Nicole Jao in New York, Anushree Mukherjee and Pranav Mathur in Bengaluru and Emily Chow in Singapore; Additional reporting by Ahmad Ghaddar in London; Editing by Jacqueline Wong, Jamie Freed, Barbara Lewis, Joe Bavier and David Gregorio)