Global financial markets fell sharply on Wednesday after US President Donald Trump announced at the NATO summit in Ankara that the ceasefire with Iran had ended. Seated beside NATO Secretary General Mark Rutte, Trump was reported to have said, “I think it’s over.” The announcement came amid renewed hostilities in the Middle East. Investors reacted swiftly, and oil prices rose. Futures on the Dow Jones Industrial Average dropped 705 points, or 1.3%, while S&P 500 and Nasdaq 100 futures also posted impressive losses. European indices followed suit: the Stoxx 600 fell 1.8%, and most sectors moved into negative territory, with oil and gas stocks the exception.
The escalation followed US military action late Tuesday, July 7, when American forces launched strikes against Iran. US Central Command said the operations retaliated for attacks on three commercial vessels in the Strait of Hormuz. The campaign reportedly struck more than 80 Iranian military installations, including air-defense and anti-ship missile sites. The US administration said the response was intended to “impose heavy costs for targeting commercial shipping crewed by civilians in international waters.” The strikes followed the breakdown of a June 17 memorandum of understanding between Washington and Tehran. Iran’s Foreign Ministry condemned the attacks as a violation of the agreement and warned that the country’s armed forces would defend its sovereignty.
The US Treasury also revoked a temporary authorization that had allowed Iranian oil sales. The 30-day license covered oil already loaded on tankers as of March 20 and was intended to ease pressure on energy supplies. Its withdrawal restored sanctions pressure on Iranian petroleum transactions. Officials described it as the third temporary sanctions waiver issued in roughly two weeks, a sign of how quickly policy was shifting alongside the military escalation.
At the NATO summit, Rutte called the US response necessary, citing Iran’s alleged breach of the ceasefire after the attacks on shipping. He stressed the need for a forceful response to maintain regional security. The renewed conflict unsettled investors, who had been pricing in gradual de-escalation between the US and Iran. The Strait of Hormuz is basic to that risk: threats to tanker traffic can disrupt the movement of crude and other cargoes, while the dispute over whether the waterway remains open adds uncertainty for shipping and energy markets.
Oil markets reacted immediately. International Brent crude futures surged nearly 6% to $78.54 per barrel, while West Texas Intermediate climbed to $74.75, also up 6%. Those were early-session prices. Later phases of the conflict brought further repricing: Brent was reported at about $101.02 a barrel and, in a subsequent surge, above $112, while WTI reached about $99.86. The later quotations reflect separate market episodes, not the same trading session. The increases added to pressure on global equities, particularly in Europe, where only oil and gas stocks avoided losses.
The ceasefire announcement did not end diplomatic contact. Iranian Foreign Minister Abbas Araghchi was reported to have said that indirect talks with Washington were continuing through mediators including Pakistan and Qatar. The discussions concerned a proposed seven-day ceasefire, while the United States sought additional clauses Iran had not accepted. On July 14, a subsequent Islamabad memorandum broke down over the wording of one clause, and a blockade was reinstated. The maritime and political consequences thus extended beyond the initial market shock.
Markets are also watching for the release of the Federal Open Market Committee’s June meeting minutes, which could provide further direction. The minutes are expected to shed light on Federal Reserve Chairman Kevin Warsh’s first policy meeting, at which officials left interest rates unchanged but signaled possible future hikes if inflation persists. Against this backdrop, oil’s renewed risk premium reflects traders’ concern that shipping disruption and tighter restrictions on Iranian exports could fuel inflation, a risk that would grow if US strikes resumed.
For Spain and other European economies, renewed instability in the Middle East and volatility in energy markets may have direct consequences. As a impressive oil importer, Spain is sensitive to global price fluctuations, which can raise transport costs and inflation, affecting the wider economy. Any sustained disruption around the Strait of Hormuz could ripple through energy supply chains and raise costs for businesses and households. Spanish authorities have closely monitored developments in the region in recent years, as rapid changes in energy prices can affect domestic costs and economic planning.
