Oil snapped back hard on Wednesday, and the reason is simple. The truce that was never a truce is over.
Brent crude traded near $90.13 a barrel, up more than 7% from Tuesday's settle of $84.09, and WTI reached $84.62 from $79.26. That reverses roughly a third of a three-day, 16% collapse that was Brent's worst run since April 2020. Two things broke overnight, and both of them were the things the market had spent three sessions betting against.
Iran Fired First
At about 5:45pm Eastern on Tuesday, Iran's Revolutionary Guard launched ballistic missiles at US forces in Jordan, targeting the Muwaffaq Salti air base and Central Command's forward headquarters. Central Command described it as an attempted surprise attack and said every missile was intercepted, with Jordan's military bringing down five. There were no US casualties.
It was the first Iranian ballistic missile attack on a US base since President Trump halted the bombing campaign on July 24, and it landed roughly two hours after his meeting with Prime Minister Netanyahu ended at the White House. The Revolutionary Guard said that as long as threats against Iran continue, the resistance will continue.
Trump answered on Fox News within hours. "We'll be hitting them hard," he said. "They're going to get a beating."
Then Tehran Killed the Deal
The second break was diplomatic, and for the oil market it may matter more.
Deputy Foreign Minister Kazem Gharibabadi went on Iranian state television and rejected the Omani proposal that this site reported on Tuesday. The terms are now public and the gap is enormous.
Oman had offered a 50-50 split of the Strait of Hormuz: half the transit route in Iranian territorial waters, half in Omani, with each side managing its own and the whole thing funded by voluntary fees shared between them, on the model of the Strait of Malacca. Malacca's equivalent arrangement raises something like $70 million a year.
A senior Iranian official called 50-50 unreasonable. Gharibabadi said Iran's own proposal is for one route to lie entirely within Iranian territorial waters, plus part of the opposite lane, which would give Tehran oversight of traffic moving in both directions. Iran is reported to be seeking a service fee of $1 million per ship, which is not a variation on the Malacca model but roughly an order of magnitude beyond it. Iran also said it will not permit any third country to clear mines from the strait, even at Oman's invitation.
And the threat attached: if Oman refuses, the strait stays closed. Oman is now floating a three-route alternative, with Iranian, international, and Omani lanes.
That is the whole trade of the past three sessions, reversed. The market sold $16 off Brent because it believed a deal was forming. On Wednesday it bought that back.
The Strikes Resumed, but Not Where You Might Assume
This needs precision, because the geography matters. Late Tuesday and early Wednesday, US and Saudi forces carried out what Central Command called joint precision strikes on logistics and weapons sites in eastern Iraq, not Iran. Central Command justified them by citing more than 30 attempted drone attacks on US forces and Saudi energy facilities in 72 hours. Saudi Arabia's defense ministry invoked Article 51 of the UN Charter, which is the first acknowledged Saudi combat role of this war.
The thirteen-night campaign against Iran itself has not formally restarted. Iranian state television reported a single US projectile landing in an uninhabited area outside Piranshahr near the Iraqi border with no casualties, which is a single-source account and unverified. Iraq's Popular Mobilization Forces claim 20 killed and 32 wounded in the Iraq strikes, also unverified, and their list of targeted provinces does not match Central Command's description of eastern Iraq.
Iraq condemned the strikes as a violation of its sovereignty while also rejecting the use of its territory to attack neighbors. The prime minister cancelled a meeting with the Saudi crown prince scheduled for Thursday.
The Two Inventory Counts Contradicted Each Other
Wednesday produced an unusually wide split between the two US inventory reports, and most coverage has blurred them together.
The American Petroleum Institute, the industry count that lands the evening before, reported a build of about 3.296 million barrels for the week to July 24, against a market expecting a draw of 2.5 million. It was the API's second consecutive build.
The Energy Information Administration, the official government count, published at 10:30am Eastern and said the opposite: a draw of 7.167 million barrels, against a consensus looking for a small build. Commercial crude stocks fell to 404.5 million barrels, roughly 7% below the five-year average for this time of year. The Strategic Petroleum Reserve lost another 3.7 million barrels to 307.7 million, its lowest level in more than 43 years.
That is a gap of more than ten million barrels between the two counts in a single week. The EIA number is the one that trades, and it is bullish. Early wire copy citing a "3.3 million barrel drop" had the direction right by accident: that figure was the API's build with the sign flipped, and the real draw was more than twice as large.
The SPR line deserves its own attention. Forty-three-year lows mean the United States has very little cushion left for an emergency release if the strait stays shut.
Still Not Kharg, and Two Numbers We Are Correcting
Kharg Island's export terminal has not been struck, has not been seized, and is still loading. That remains the line between this price and a far worse one.
Two figures in our recent coverage need updating, and readers should have the better ones.
First, the queue off Kharg. We reported roughly 24 tankers waiting. That figure traces to early May. Current vessel tracking shows just two stationary dark tankers in the waiting area, one laden since July 12 and one in ballast since May 14. The queue drained through June without loading. Two is the right number, and it is a more sobering one: this is not a traffic jam, it is a terminal that has nearly stopped being used.
Second, war-risk insurance. We have been citing 7.5% to 10% of hull value. That range comes from March and applied to a narrow class of US, UK and Israeli-linked vessels. The broader current market, per Marsh, is 2% to 6% with about 5% as the norm, against 0.15% to 0.25% before the conflict. That still means roughly $6 million to move a $100 million tanker through the strait once, but the higher range overstated it.
The shipping picture itself is worse than either number suggests. On July 27 only six vessels transited Hormuz in total, and not one of them was a tanker. Oil flow through the strait is running near 1.5 million barrels a day against roughly 15 million before the conflict, and about 70% of the tankers that do move are running dark with transponders off.
The Insurers Just Widened the War
The freshest genuinely new development in shipping has nothing to do with Iran. Lloyd's underwriters including Ascot and Navium have begun excluding any vessel that has called at a Saudi port from Red Sea war-risk cover, and cancelling existing policies. That followed the Houthi attacks on Jizan and Yanbu.
The effect is mechanical and immediate: tanker transits through Bab el-Mandeb have fallen about 39%. Insurance is now doing what the missiles could not, which is closing a second waterway by making it uninsurable.
On Jizan itself, Aramco has still published no damage assessment, four days on. The 400,000 barrel a day shutdown and the August 15 restart target both come from a consultancy note seen by Reuters, not from the company. Satellite imagery does corroborate real fire damage there, which distinguishes it from the Abqaiq claims.
Abqaiq, Again
The false Abqaiq story from earlier this week has mutated rather than died. Outlets are now claiming Aramco has fully halted operations at Abqaiq, removing about 7 million barrels a day of processing capacity.
There is no Aramco statement and no Saudi statement supporting this. The 7 million figure is Abqaiq's nameplate capacity being recycled into headlines as though it were an outage volume, which is the tell. Bloomberg's satellite imagery showed flaring, and said explicitly that it offered few clues about production. Saudi Arabia's defense ministry said the drones aimed at Eastern Province facilities on both Monday and Tuesday were intercepted with no damage confirmed.
Attribution for those drones is genuinely disputed three ways: Saudi Arabia blames Iran-backed militias firing from Iraq, the Houthis claim them, and the Islamic Resistance in Iraq denies involvement. That is unresolved, which is different from resolved in favor of catastrophe.
What the Forecasters Have Not Done
Nobody has revised anything. Across roughly two dozen firms there is not a single forecast change dated July 27, 28 or 29. The published curve is frozen at levels set into the $100 spike, and no one has marked it to the 16% collapse or to Wednesday's snapback.
Goldman Sachs reaffirmed $80 Brent for the fourth quarter, with above $120 if Hormuz stays disrupted, and analyst Daan Struyven's summary is worth quoting: the chances of going higher have increased, and the chances of going lower have not. JPMorgan's July fair value is $87, which oil has now moved back above. Barclays carries the highest base case at a 2026 average of $96 and the highest scenario at $150 spot. One correction to our own framing: we have said no bank has a triple-digit base case, and that is still true, but Barclays at $96 is closer than that phrasing implied.
What to Watch Today
The inventory question is settled and it came in tight. The remaining scheduled event is the Federal Reserve at 2pm Eastern, with the target range at 3.50% to 3.75% and the live question being whether the committee holds or hikes, which matters for oil through the dollar.
Beyond that, the question is whether Trump's promised beating means a fourteenth night over Iran itself, and whether Oman's three-route idea gets a hearing before the strait becomes permanent. Kharg is still standing. On the evidence of this week, that is the only thing keeping these numbers where they are.
This article is for informational purposes only and does not constitute financial or investment advice. Oil market conditions can change rapidly. Consult a qualified financial professional before making investment decisions.