Crude oil surges 12% in two days, tops $80/bbl amid US-Iran tensions; what's driving the rally?

Latest updates from the attacks in West Asia showed that the United States carried out a second round of airstrikes against Iran on Wednesday evening as President Trump now set aside the ceasefire deal between the two countries.

Key focus of investors continues to remain on monitoring the developments in the West Asia conflict at a time when America and Iran have a 60-day period to negotiate a final peace agreement, as per the MoU update.

The recent rise in oil prices are weighing down the market sentiment of a near-term end to the ongoing conflict; however, hopes of an upcoming final peace deal remain in cards for investors.

How have oil prices fared?

Data collected from Investing.com showed that benchmark Brent crude oil prices surged 12% to a high off $80.59 per bbl on Wednesday evening, compared to the pre-escalation levels of $72.11 per bbl on Tuesday’s opening bell.

At 10:45 am (IST) on Thursday, July 9, Brent crude oil futures were trading 1.14% higher at $78.91 per bbl, compared to to $78.02 per bbl at the previous commodity market close, as per the exchange data.

While the West Texas Intermediate (WTI) crude oil prices were trading 1.22% higher at $74.42 per bbl on July 9, compared to $73.52 per bbl at the previous market close, Investing.com data showed.

Crude oil prices in the global market have surged nearly 10% in the last five trading session basis; however, the energy rates were trading 13% lower in the last one month period, according to the exchange data.

Due to the impact of the US-Iran conflict in West Asia, and the supply chain disruption due to Strait of Hormuz closure, the oil prices surpassed $119 per bbl at the peak of the conflict in April 2026, only to eventually ease to pre-war levels after US and Iran agreed at an interim peace deal.

Oil prices remain at risk of a flare-up and are tied to the ongoing developments in West Asia, as a major chunk of the global oil trade is executed via the key maritime trading route, the Strait of Hormuz.

Any further escalations also pose the risk of disruption of oil trade via the key route, similar to what happened at the beginning of the conflict in March 2026.

Key factors fuelling oil’s recent rally

Trump’s first wave

Oil prices were trading at their pre-war levels in the range of $71-$72 per bbl before the US President Donald Trump’s retaliatory attack on 80 strategic locations in Iran spiked the energy prices in the global market.

On Tuesday evening, the United States carried out targeted airstrikes on 80 locations in Iran in response to the West Asian country allegedly violating the existing ceasefire agreement with attacks on commercial vessels transiting the Strait of Hormuz.

US Central Command, in an official statement, said that the airstrikes destroyed Iranian air defence systems, command and control networks, coastal radar sites, anti-ship missile capabilities, and over 60 Islamic Revolutionary Guard Corps small boats in and near the Strait of Hormuz.

The attacks came after the United States re-imposed sanctions on Iranian oil exports weeks after the MoU deal lifted the same.

Iran’s threat

After the first wave of US attacks in Iran, the Iranian joint military command, Khatam al-Anbiya Central Headquarters, threatened the US forces and said that the country would deliver a “crushing response” to US airstrikes.

Later on Wednesday, July 8, Iran retaliated by launching missiles and drones at US military facilities in Bahrain and Kuwait in response to earlier airstrikes and renewed sanctions on Iranian oil exports.

Ceasefire at risk

With Iran’s attacks in West Asia, US President Donald Trump, speaking at a NATO summit in Istanbul, said that the ceasefire between America and Iran was “over” and he no longer wants to negotiate with the country.

“The ceasefire is over as far as I'm concerned,” Trump told media at the event.

The US leader also said that the United States is wasting time pursuing diplomacy with Iran, and that the escalations will get “much worse” if the West Asian country continues attacking more ships passing through the Strait of Hormuz.

Media reports suggest that the Iranian Health Ministry spokesperson said that around 14 people have been killed and 78 people wounded due to the attacks in the last two days in the country.

The latest report from CNN suggests that the US military is in a ‘wait-and-watch’ mode as the fragile ceasefire agreement looms over both countries at war.

Trump’s second wave

US Central Command (CENTCOM) in an official statement on July 9, said that the US military as carried out an additional round of airstrikes against 90 targets in Iran on Wednesday evening to ‘degrade’ the country’s ability to attack commercial ships.

“U.S. forces struck approximately 90 Iranian military targets including air defense systems, coastal surveillance assets, missile and drone storage sites, naval capabilities, and military logistics infrastructure along Iran’s coastline,” CENTCOM said in its statement.

The military agency also highlighted that the United States remains vigilant, lethal, and prepared to execute operations directed by the President (Commander-in-Chief) Donald Trump.