Brent crude futures jumped nearly 6% in early trading, climbing to $77.30 a barrel, after US President Donald Trump declared the ceasefire and memorandum of understanding with Iran effectively over.
The administration simultaneously reinstated sanctions on Iranian oil and launched fresh strikes, marking a decisive escalation in tensions that had previously been contained by diplomatic agreements.
The move instantly revived fears of supply disruption in the Strait of Hormuz, a critical chokepoint for global energy flows.
The sharp repricing reflects market anxiety over potential supply constraints.
With the Strait of Hormuz handling a significant portion of global oil shipments, any threat to its security sends shockwaves through energy markets.
The sudden reversal of the ceasefire agreement removes a key pillar of stability in the region, forcing traders to price in a higher risk premium for Middle Eastern crude.