US and Iran exchange strikes in Gulf, ceasefire collapses as oil prices spike over 5%
The United States launched strikes on Iranian targets, and Iran retaliated by hitting US facilities in Bahrain and Kuwait, raising fears of a wider conflict.
Escalation of military strikes
On the night of 7 July, the United States launched strikes against more than 80 Iranian targets, including over 60 fast attack craft of the Islamic Revolutionary Guard Corps, in retaliation for attacks on three oil tankers in the Strait of Hormuz. CENTCOM said the operation was to impose “elevated penalties” for Iran’s “unjustified, dangerous and clear violation of the ceasefire.” A US official told the Washington Post the strikes would likely continue for some time, with further details to be released once the operation concludes.
Iran responded hours later, announcing it had hit 85 US military installations in Bahrain and Kuwait using missiles and drones, and downed an MQ-9 drone. The IRGC described it as a joint Navy-Aerospace operation and a first response to the “clear violation” by Washington of the June ceasefire. Iran’s armed forces had earlier warned that any territory used by the US to attack Iran would become a “legitimate target.”
- Brent crude
- 5.26 %
- WTI
- 5.32 %
Ceasefire collapse and diplomatic reactions
The June memorandum of understanding, a 14-page document intended to extend the truce and end hostilities on all fronts, now appears shattered. Foreign Minister Araghchi said the reinstatement of US sanctions and ongoing Israel-Hezbollah fighting had rendered “essential parts” of the deal ineffective, and stressed Iran would not hesitate to defend its territorial integrity and sovereignty.
The United States committed a blatant violation of the memorandum of understanding, making essential and fundamental parts of the understanding to end the war ineffective.
EU foreign policy chief Kaja Kallas called Iran’s strikes on Bahrain and Kuwait “unacceptable,” warning they complicate already difficult negotiations. She announced an EU-Gulf foreign ministers’ meeting on Monday to discuss freedom of navigation.
The hostilities between the United States and Iran further complicate the already difficult negotiations to end the war. Iran’s attacks on Bahrain and Kuwait are unacceptable.
NATO Secretary General Mark Rutte backed the US action as “absolutely necessary,” accusing Iran of having “on principle violated the ceasefire.” In Tehran, parliament speaker Mohammad Bagher Ghalibaf argued the US had broken the MoU by interfering with Iranian adjustments in the Strait of Hormuz.
Regional impact and warnings
Air-raid sirens sounded three times in Bahrain on Wednesday morning, and Kuwait’s army reported its air defences were engaging hostile missiles and drones. Iranian state media said civilians in Sirik county were injured by shrapnel, with the villages of Ziyarat and Tahrovi affected. Explosions were reported at key points around the Strait, including Qeshm island and the port city of Bandar Abbas, where several fishing boats were destroyed. President Masoud Pezeshkian, who was in Iraq attending the funeral of Supreme Leader Ali Khamenei, returned to Tehran after the strikes.
Qatar directly accused Iran of hitting the LNG carrier Al Rekayyat, calling it a “grave and explicit violation” of international law.
We demand the Islamic Republic of Iran immediately cease all practices that compromise regional security or threaten the safety of maritime navigation.
Oil market reaction
Oil prices jumped sharply in early European trading. Brent crude for September delivery rose 5.26% to $78.06 a barrel, while West Texas Intermediate for August rose 5.32% to $74.19. The surge came after President Donald Trump referred to the end of the truce with Iran, with tensions now threatening the free flow of crude through the Strait of Hormuz, a chokepoint for global energy supplies.
