Oil prices jump as renewed US-Iran strikes shake markets

Last updated: July 8, 2026, 10:43 a.m.

Oil prices surged on Wednesday, July 8, after the United States and Iran exchanged new strikes and President Donald Trump said the interim ceasefire agreement was "over." Brent crude climbed above $78 US a barrel, while Canadian bond markets weakened as investors reassessed inflation and interest-rate risks.

The renewed confrontation has put the Strait of Hormuz back at the centre of global energy markets. For Canadians, the immediate consequences reach beyond oil-company shares: a sustained price increase could affect inflation expectations, borrowing costs and the Bank of Canada's policy outlook.

The Full Story

The latest escalation followed attacks on three commercial vessels in the Strait of Hormuz. The US military said it responded with strikes on Iranian air-defence systems, coastal surveillance sites, missile capabilities and more than 60 small boats linked to the Islamic Revolutionary Guard Corps.

Iran then said it targeted US military sites in Bahrain and Kuwait with missiles and drones. Air-raid sirens sounded in both countries, and Kuwait said its air defences were engaging hostile attacks. At least four oil and gas tankers turned back while attempting to transit the strait, adding to concerns about the safety of a waterway central to Gulf energy exports.

Trump told reporters at the NATO summit in Ankara that he considered the interim agreement finished, although he said negotiations could continue. He also warned that the United States would hit Iran again. The combination of military action and diplomatic uncertainty quickly pushed a new risk premium into oil.

Brent crude rose more than 5% at one point to $78.48 US a barrel, while AP reported a 4.8% gain to $77.74 after prices briefly topped $79. That remains far below the nearly $120 peak reached earlier in the war, but the reversal was sharp because oil had recently fallen back toward pre-war levels. Readers following the wider market move can compare it with the earlier oil price surge past $100.

Central Figures

Trump is the central political figure because his statement that the agreement was over changed the market's view of the ceasefire. His warning of further strikes added to fears of another round of military escalation.

Iran's military and political leadership, meanwhile, accused Washington of violating the agreement through fresh attacks and renewed sanctions on Iranian oil. Parliament Speaker Mohammad Bagher Qalibaf said Tehran would not fold, while Iranian forces said they had struck US military facilities in Bahrain and Kuwait.

NATO Secretary General Mark Rutte backed the US response, calling the overnight strikes "absolutely necessary." His comments gave Washington public support from the alliance's top official as NATO leaders met in Ankara.

The Data

The market reaction was broad. Brent crude moved above $78 US a barrel, while West Texas Intermediate was reported at $72.29, up 2.63%. AP said the Dow Jones Industrial Average fell about 550 points, the S&P 500 lost 0.5%, and the US 10-year Treasury yield rose to 4.58%.

Canadian markets also felt the shift. The Globe and Mail reported that Canada's cash bond market opened about 5 basis points weaker, while overnight index swaps moved closer to pricing a Bank of Canada rate increase by year-end.

Shipping data adds another layer of risk. Traffic through the Strait of Hormuz had been running at roughly one-third of normal levels, and about 200 million barrels of oil moved through during three weeks of partial reopening. CNN reported that shipping oil from inside the strait to Asia could cost $8 million to $10 million per vessel, roughly double the cost from outside the waterway.

What This Means

The key issue for markets is not simply whether oil is higher today. It is whether ships can continue moving through the Strait of Hormuz. As long as oil keeps flowing, price increases may remain constrained. A major closure would create a much more serious supply problem.

For Canada, higher crude prices create competing effects. Energy producers can benefit from stronger prices, while consumers and businesses face the risk of renewed inflation pressure. More expensive energy can also complicate the interest-rate outlook because central banks may become less comfortable easing policy when fuel costs are rising.

The available market commentary points to the same pressure point: continued shipping through the strait. Canadian investors will be watching oil flows, tanker movements and whether fresh military exchanges continue, because those developments could influence both energy-sector performance and expectations for Bank of Canada policy.

What to Expect

The next confirmed focus is further US military action after Trump's warning of additional strikes. Negotiations have not formally ended, however, because Trump said US representatives could continue talks.

Markets will also track tanker traffic through the Strait of Hormuz. At least four vessels had already turned back, while other ships continued to transit the waterway despite the higher security risk.