U.S. President Donald Trump unilaterally declared an interim peace deal with Iran "over" today, July 8, 2026, just weeks after the agreement had ended a four-month conflict. This abrupt reversal immediately sent oil prices soaring by more than 5% and gold markets tumbling by over 1%, reigniting regional tensions and global market instability. Trump stated he didn't want to engage with Tehran, despite the memorandum of understanding signed less than a month ago.
This declaration follows a period of intense volatility that saw crude markets grappling with an extreme supply shortage. Only last month, the Strait of Hormuz had been closed, severely disrupting global oil flows. The interim ceasefire agreement, signed on June 17, had temporarily eased these pressures, allowing hundreds of millions of barrels stranded in the Gulf to be released onto the market. Total Middle East crude exports, including volumes bypassing Hormuz, surged to 12.35 million barrels per day in June from less than 8 million bpd in May, with July exports projected to reach 12.5 million bpd.
Renewed Hostilities
The four-month conflict, which erupted on February 28, 2026, involved significant military actions. Iran's Revolutionary Guards targeted U.S. military bases in Bahrain and Kuwait. These actions came in response to U.S. strikes on Iran and the U.S. revocation of a license that had allowed the country to sell oil. The U.S. decision to scrap the peace deal and maintain economic pressure through the oil license revocation directly undermines any path to de-escalation, despite the previous ceasefire.
Before Trump's announcement, global benchmark Brent crude futures had retreated to around $70 a barrel, a level consistent with pre-conflict prices and $50 below the wartime peak. Gulf producers, including Saudi Arabia and the UAE, had been aggressively competing for market share, releasing crude from storage and reactivating shut-down oilfields. This temporary glut, however, remains well below the pre-war average of around 18 million bpd in regional exports.
Economic Warfare
Refiners worldwide had enjoyed a brief windfall as markets adjusted to the Strait of Hormuz reopening. The benchmark U.S. 3-2-1 crack spread, a key measure of refining profitability, climbed above $60 a barrel, marking a record high. Refining margins in Asia and Europe also saw sharp increases. Fuel prices remained remarkably strong, reflecting exceptionally tight inventories after months of disruption caused by the conflict.
In the U.S., gasoline refining margins surged by over 60% since early June, reaching more than $56 a barrel. This approaches the record highs seen during the energy crisis of June 2022, in the fourth year of Russia's invasion of Ukraine. The U.S. is entering its peak summer driving season with gasoline inventories at their lowest level in over a decade for this time of year. These stocks were heavily depleted during the Iran conflict as U.S. refiners boosted exports to compensate for shortages elsewhere. Diesel markets showed a similar pattern, with European refining margins climbing above $50 a barrel as global inventories fell sharply.
Market Instability
Gold prices, traditionally considered a safe haven, fell by 1.02% to $4,063.67 per ounce, dropping to its lowest point since July 2. U.S. gold futures for August delivery shed 1.97% to $4,074.80/oz. Higher energy prices, fueled by renewed conflict fears, have raised concerns about inflation and potential U.S. interest rate hikes, which typically weigh on non-yielding metals. Markets currently anticipate a 66% chance for a U.S. rate hike in September, an increase from 62% just yesterday. UBS analyst Giovanni Staunovo noted that gold is likely to remain in a consolidation mode in the short term, requiring further weakening of U.S. jobs data and lower U.S. inflation figures for prices to move higher.
China's central bank reported its biggest monthly increase in gold reserves in more than two and a half years in June, as announced yesterday, July 7, 2026. Other precious metals also experienced declines, with spot silver falling 2.37% to $58.59 per ounce, platinum slipping nearly 3% to $1,591.88, and palladium dropping 3.9% to $1,227.18.