U.S.-Iran Conflict Resurges, Hormuz Strait Crisis Puts Oil Markets on Alert
FastBull FeaturedSummary:
The U.S. launched a third round of strikes against Iran this week; commercial shipping traffic through the Strait of Hormuz has declined sharply......
Highlights
1. U.S. launches third round of strikes against Iran this week
2. Iran’s Revolutionary Guard announces closure of the Strait of Hormuz
3. Iran issues strong warning to the U.S.: Failure to honor the agreement will trigger retaliation
4. Commercial shipping traffic through the Strait of Hormuz plunges sharply
5. U.S. labor market remains broadly stable; Fed reiterates commitment to price stability
6. IEA cuts 2026 oil demand decline forecast to 1 million barrels per day
Details
U.S. launches third round of strikes against Iran this week
According to the latest statement released by U.S. Central Command on social media, at 19:15 Eastern Time on July 11, U.S. Central Command forces began a third round of strikes against Iran this week under the direction of President Donald Trump. The statement said that Iran’s Islamic Revolutionary Guard Corps had previously attacked a Cyprus-flagged container ship traveling through the Strait of Hormuz. One civilian crew member went missing, and the vessel was unable to continue sailing due to a fire and severe damage to the engine room.
The statement added that Iran had previously been held accountable for attacks on commercial vessels and was given another opportunity to demonstrate compliance with the memorandum of understanding, but failed to fulfill its commitments again. In response, the United States is continuing efforts to weaken Iran’s ability to attack civilian crews and commercial vessels seeking free passage through the strait, forcing Iran to pay a heavy price.
Iran’s Revolutionary Guard announces closure of the Strait of HormuzEarly on July 12, the naval forces of Iran’s Islamic Revolutionary Guard Corps announced that the Strait of Hormuz would be closed immediately and that no vessels would be permitted to pass through. The statement said Iran had previously warned that foreign interference in the affairs of the Strait of Hormuz and the unauthorized designation of shipping routes would trigger a firm response.
Given that the current unsafe situation was caused by illegal foreign intervention, the Strait of Hormuz would remain closed until further notice and until the United States stops interfering in the region, the statement said.
It added that several vessels had attempted to navigate along routes not approved by Iran hours earlier, ignoring Iranian warnings and requests to adjust their courses. One vessel had disabled its Automatic Identification System (AIS) and was hit by a warning shot from Iranian forces, forcing it to stop.
The statement further warned that if the U.S. used the incident as a pretext to launch new attacks against Iran, Tehran would respond forcefully and strike additional U.S. bases in the Middle East.
Iran issues strong warning to the U.S.: Failure to honor the agreement will trigger retaliationAli Safari, an adviser to the spokesperson of Iran’s Ministry of Foreign Affairs, warned that recent U.S. military strikes would not go unanswered and accused Washington of failing to fulfill its commitments under the memorandum of understanding signed on June 16.
Safari emphasized that the memorandum clearly assigned responsibility for future arrangements regarding the Strait of Hormuz to Iran, with coordination required with countries such as Oman. However, the southern shipping route established under U.S. pressure not only hindered implementation of the agreement but also created serious security risks, including vessels disabling navigation systems while passing through the area, which he described as irresponsible behavior.
He stated that the United States must either comply with the agreement signed 23 days earlier or completely abandon its commitments. He also claimed that Iran’s capabilities far exceed U.S. expectations and that Tehran is fully prepared for war.
Commercial shipping traffic through the Strait of Hormuz plunges sharplyFollowing Iran’s announcement that it would once again close the Strait of Hormuz, commercial shipping activity through the strategic waterway dropped significantly on July 12.
According to commercial shipping tracking data cited by Iran, only 11 commercial vessels passed through the Strait of Hormuz over the previous 24 hours, including eight oil tankers and three cargo ships.
Early on July 12, the naval forces of Iran’s Islamic Revolutionary Guard Corps issued a statement saying that they had fired warning shots at a vessel in the Strait of Hormuz. The statement said the temporary closure was necessary because the current unsafe situation was caused by illegal foreign intervention. No vessels would be allowed to pass until further notice and until the United States ended its intervention in the region.
U.S. labor market remains broadly stable; Fed reiterates commitment to price stabilityThe Federal Reserve stated in its semiannual monetary policy report that the U.S. labor market remains broadly stable and productivity growth remains strong. Labor supply growth has slowed due to weaker immigration flows and demographic changes.
The report said that investment in artificial intelligence-related data centers has driven strong factory output, while U.S. production capacity continues to expand at a steady pace. In the first half of 2026, foreign economic activity weakened due to headwinds from the Middle East conflict and U.S. tariffs, although part of the impact was offset by AI investment.
The report noted that inflation, which was already elevated, accelerated further in the spring. High inflation partly reflected supply shocks. Inflation remains elevated, mainly driven by tariffs, factors related to the Middle East conflict, and AI-related demand. However, some inflation measures, including trimmed-mean inflation, have shown signs of moderation.
Despite the high level of uncertainty caused by the conflict with Iran, economic activity continues to expand at a solid pace. The Federal Reserve reiterated its commitment to maintaining price stability and stated that it is prepared to use all available tools to achieve its dual mandate of maximum employment and stable prices.
IEA cuts 2026 oil demand decline forecast to 1 million barrels per dayIn its July monthly Oil Market Report, the International Energy Agency (IEA) forecast that global oil demand in 2026 would decline by 1 million barrels per day, narrowing from its previous forecast of a 1.1 million barrels-per-day decline in mid-June. The revision suggests that demand recovery is gradually gaining momentum.
The agency noted that global supply has partially recovered due to the temporary restoration of traffic through the Strait of Hormuz during the June ceasefire. However, overall production in the Middle East remains well below pre-conflict levels, leaving a persistent supply-demand gap.
The IEA emphasized that the renewed escalation of hostilities between the United States and Iran has created significant uncertainty for oil supply and demand forecasts that were previously based on the assumption of a ceasefire. If the conflict continues, the normalization process in oil markets could be disrupted.
The agency warned that the renewed outbreak of armed conflict in the Persian Gulf highlights the risks of failing to reach a lasting peace agreement, which remains a necessary condition for restoring balance between global oil supply and demand.
Today’s Focus
TBD: OPEC releases its monthly Oil Market Report00:30: Federal Reserve Governor Waller delivers a speech
02:00: Bank of England Chief Economist Pill delivers a speech
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