NEW DELHI: Oil markets jumped on Wednesday Oil after the US reinstated sanctions on Iranian oil and President Donald Trump declared the ceasefire and memorandum of understanding (MoU) with Iran effectively over, reviving fears of renewed conflict in West Asia and fresh disruptions to global energy supplies.
The developments put Indian refiners and global oil traders on alert as markets assessed the risk of further escalation around the Strait of Hormuz, a key artery for global crude shipments.
Speaking in Ankara ahead of a NATO summit, Trump said he had no interest in engaging further with Iran, signalling that the diplomatic opening created by the 18 June MoU had effectively collapsed.
“To me, I think it’s over. I don’t want to deal with them anymore… I’ll speak to our negotiators. They want to negotiate—they’re good people… but they have to come back to me. As far as I’m concerned, it’s just a waste of time dealing with them,” Trump said in response to a question on the ceasefire.
At 3.40 pm, Brent crude’s September contract traded at $78.74 a barrel, up 6.18% from previous close and highest since 19 June. West Texas Intermediate gained 6.40% to $74.95 a barrel.
Sanctions and strikes
The renewed volatility followed a series of military and diplomatic moves by both sides.
US Central Command (Centcom) said it struck more than 80 targets on Tuesday in response to Iran’s alleged attacks on commercial vessels in the Strait of Hormuz, targeting air defence systems, command-and-control networks, coastal radar sites, anti-ship missile capabilities and more than 60 Islamic Revolutionary Guard Corps boats.
Iran, meanwhile, accused Washington of violating the MoU.
Posting on X, Mohammad Bagher Ghalibaf, speaker of the Iranian Parliament and a member of Tehran’s negotiating team, listed what he described as “major MoU violations” by the US, including “violating Iranian adjustments in the Strait”, “persistent threats of further strikes”, “reinstating oil sanctions and attacks on southern Iran”.
“The era of bullying and extortion is over. It leads nowhere. We don’t fold,” Ghalibaf said.
Earlier in the day, the US ended the sanctions waiver on Iran, which under the MoU had been due to remain in force until 21 August. Iran has not formally responded to Trump’s assertion that the ceasefire or the MoU has ended.
India watches Hormuz
The renewed tensions have again put the Strait of Hormuz at the centre of global energy markets.
For India, which imports about 90% of its crude oil requirements, any disruption in the Strait of Hormuz poses a significant risk. About 20-25% of India’s crude imports currently pass through the waterway, down from 60-70% before the conflict began on 28 February. Higher oil prices could fuel inflation and weigh on growth at a time when El Niño and a weaker monsoon are already expected to pressure the economy.
Although Indian refiners no longer buy Iranian crude, they continue to import liquefied petroleum gas (LPG) from the country and had been exploring long-term crude purchases. A renewed disruption could also affect supplies from other West Asian producers that had resumed after the US-Iran MoU.
The more than three-month conflict involving Iran, the US and Israel has already disrupted energy supply chains. The government had only recently begun easing supply restrictions for diesel and LPG after shipping through the Strait of Hormuz resumed.
Maulik Patel, head of research at Equirus Securities, said, “A sustained crude spike widens the oil import bill, pressures current account, feeds inflation and keeps rupee on back foot. That said, India’s growth has become structurally far less energy-intensive over past two decades.”
Patel said the outlook for oil marketing companies remained mixed but tilted to the downside. “Marketing margins have recovered recently supporting integrated margins amid strong product cracks also, but a fresh crude spike can quickly squeeze margins if pump prices are held.”
The Reserve Bank of India last month lowered its FY27 GDP growth forecast to 6.6% from 6.9%, citing rising risks from the West Asia conflict, elevated energy prices, supply disruptions and weather-related uncertainties.
Pronob Sen, former chief statistician of India, said, “The fresh skirmish in West Asia and reinstatement of sanctions on Iranian oil don’t necessarily add a new dynamic to the outlook on inflation and growth of Indian economy. They are not going to change anything radical.”
Pressure tactics—or a deeper rupture?
Strategic experts said the latest escalation could still be a negotiating tactic rather than a complete diplomatic breakdown.
Shweta Singh, associate professor at South Asian University, said the ceasefire remained fragile and episodic flare-ups were likely until there was clarity on a broader settlement.
“There is fresh escalation around the Strait of Hormuz straining the already fragile ceasefire agreement, which could be read as a fresh pressure tactic on both sides as the US revokes the 60-day exemption for sale of Iranian oil,” Singh said. “Much remains to be watched as both Iran, and the US would technically settle for an offramp, without the optics of it. But till then Hormuz remains shaky, and so does oil.”
C. Udai Bhaskar, director, Society for Policy Studies, said oil markets, refiners, insurers and the broader energy ecosystem remain highly sensitive to any increase in violence in the region, and the latest cycle of US-Iran hostilities and renewed sanctions would keep markets on edge.
He said the longer-term outlook for both the region and India remained one of uncertainty.
“India will also be very concerned if there is a disruption again in the transit of ships through the Hormuz strait as not only will the import bill go up, but for the common man it will also be reflected in the anxiety of the availability and price of cooking gas cylinders,” he said.
