Morning Highlights: Brent Jumps 6% to $78 as Trump Says MOU is Over; Iran Strikes U.S. Bases in Bahrain and Kuwait, Four Tankers Turn Back From Hormuz

Wednesday, July 8, 2026 | 6:45 AM ET

Brent (September) $77.89 | WTI (August) $73.94 Brent +3.73 (+5.0%), WTI +3.50 (+5.0%), highest since June 22. Both contracts rose approximately 3% Tuesday after the U.S. revoked the Iranian oil sales license before adding further gains Wednesday. Four tankers have turned back from Hormuz transit attempts. Trump says MOU is over and he does not want to engage with Tehran; Iran strikes 85 U.S. military sites in Bahrain and Kuwait, shoots down U.S. MQ-9 drone; U.S. reinstates Iranian oil sanctions; Iran warns U.S. against interfering in its Hormuz management; China lifts refined fuel export curbs for July.

Iranian missiles hitting a Saudi tanker and Qatari LNG vessel Tuesday, U.S. airstrikes on Iranian targets in response, Iran striking 85 U.S. military sites in Bahrain and Kuwait and shooting down an MQ-9 drone, U.S. reinstating Iranian oil sanctions - is not a weekend skirmish followed by a Sunday agreement to halt and talk. It is a sustained military exchange involving U.S. bases in multiple Gulf states, and the market is pricing accordingly.

SEB's Bjarne Schieldrop put the fundamental framing clearly: a price closer to $80 is more consistent with current market fundamentals than $70. The sell-off to pre-war levels over the past three weeks was pricing a smooth normalization that this week's events have interrupted. The short positions that traders accumulated since the MOU was signed are now being squeezed against a market that has repriced 6% in a day. MST Marquee's Saul Kavonic - who flagged last week that the market was underestimating the risk of further disruptions and that Iran would continue to find pretexts to stymie flows -- has been proven correct faster than even a bearish view would have predicted.

The four tankers that turned back from Hormuz transit attempts are the most concrete physical signal of what a breakdown means for the supply recovery. Flows had reached approximately 14 tankers per day through the strait by late June - still well below the pre-war 70-plus daily norm but a genuine improvement. If tankers are turning back, that recovery stalls immediately and the backlog that had been clearing begins to rebuild. The market does not need a full Hormuz closure to reprice materially higher - it needs only for the confidence that had been building among shipowners to reverse, and four turnarounds in a single morning does exactly that.

China lifting refined fuel export curbs for the rest of July is a constructive development that would matter more in a calmer session. Planned exports of roughly 3 million metric tons this month -- close to last year's average -- represent a normalization of Chinese product trade that eases regional fuel supply tightness in Asia and encourages state refiners to raise throughput, which in turn supports crude import recovery. Zhejiang Petrochemical being permitted to export after a four-month halt is a sign Beijing believes the supply emergency has passed. Whether that assessment holds through Wednesday's events remains to be seen.

Top Developments

Trump Says MOU Is Over, U.S. Reinstates Iranian Oil Sanctions

Trump said at the NATO summit in Ankara that the MOU signed with Iran to end the conflict is over and that he does not want to engage with Tehran, following the exchange of strikes overnight. The U.S. revoked the general license authorizing Iranian oil sales on Tuesday and conducted airstrikes on Iranian targets in response to the attacks on three commercial vessels in Hormuz. Iran's military called the U.S. strikes an overt act of aggression and warned of a crushing response. Iran's top negotiator and parliamentary speaker Ghalibaf accused the U.S. of major violations of the preliminary accord. Negotiations had already been paused pending funeral ceremonies for Supreme Leader Khamenei, who died on February 28, the first day of the conflict. Ole Hansen at Saxo Bank noted the market is being forced to price the risk that renewed attacks on shipping or a broader breakdown in U.S.-Iran relations could slow Hormuz flow normalization, with $75 the natural next level to watch and $80 beyond that.

Iran Strikes 85 U.S. Military Sites in Bahrain and Kuwait, Shoots Down MQ-9

Iran's IRGC said it targeted 85 U.S. military sites in Bahrain and Kuwait following U.S. airstrikes on Iranian territory, and shot down a U.S. MQ-9 drone in the operation. Kuwait's army said air defenses were intercepting hostile missiles and drones. Iran's military central command warned the U.S. against interfering in Tehran's management of the Strait of Hormuz. Tehran has not formally claimed responsibility for Tuesday's attacks on the Saudi crude tanker and Qatari LNG carrier that triggered the U.S. strikes. The geographic scope of the Iranian retaliation - hitting U.S. bases in two separate Gulf states simultaneously - is a broader strike pattern than any prior exchange during the conflict and marks a meaningful escalation in the military dimension regardless of the diplomatic framing.

Four Tankers Turn Back From Hormuz, Supply Recovery Stalls

At least four oil and gas tankers turned back from Hormuz transit attempts following the renewed vessel attacks, ship-tracking data showed. The reversals are the clearest immediate physical consequence of the diplomatic breakdown - the confidence that had been building among shipowners since late June, reflected in 98 tankers crossing the strait in the week of June 22 to 28, is now in question. Any sustained reduction in tanker willingness to transit will slow the clearing of the remaining backlog, rebuild floating storage, and delay the Gulf export normalization that the consensus surplus forecast for late 2026 and 2027 depends on. MST Marquee's Kavonic had flagged last week that the market was underestimating the risk of Iran finding pretexts to stymie flows - that assessment has been validated within days.

China Lifts Refined Fuel Export Curbs for July, Normalization Underway

China lifted refined fuel export restrictions for the rest of July and permitted Zhejiang Petrochemical -- majority owned by Rongsheng - to resume shipments after a four-month halt, trade sources said. Planned July exports total approximately 3 million metric tons including bonded volumes, close to last year's average, with gasoline exports potentially rising to over 400,000 metric tons from below 40,000 tons in preliminary plans, diesel to 600,000 to 700,000 tons from around 200,000 tons, and jet fuel to roughly 1.9 million tons. Export margins remain lucrative at 1,000 yuan per ton or more. Whether curb removal continues into August remains unclear. The move signals Beijing believes the domestic supply emergency has passed and that export economics are compelling enough to resume normal trade flows - a normalization signal that Wednesday's broader escalation complicates.