US strikes Iran and blocks oil sales in new threats to ceasefire
The spate of attacks is a reminder of the continued risks to ships crossing through Hormuz
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[NEW YORK] The US launched fresh airstrikes on Iran and revoked a waiver that allowed it to sell oil globally, further imperilling a peace agreement after a spate of attacks on ships in the Strait of Hormuz.
The “powerful strikes” were meant to “impose heavy costs for targeting and attacking commercial shipping crewed by innocent civilians in an international waterway”, US Central Command said.
Hours earlier, the US Treasury Department announced it was barring new sales of Iranian oil after Jul 7, a move that sent oil prices surging. Gold also slumped amid fears that elevated energy prices might prompt the US Federal Reserve to raise interest rates.
Taken together, the US action marked the most serious threat yet to the interim agreement signed between the two countries’ leaders on Jun 17. They also threatened to scuttle negotiations aimed at achieving a permanent peace within 60 days of that deal.
The precise targets and number of casualties were not clear, but Iran’s Mehr news agency reported explosions were heard near the strait.
Both sides accused the other of violating the ceasefire. The US blamed Iran for a series of attacks on commercial shippers in Hormuz over the last day, the most since the agreement went into effect.
Iran, meanwhile, said the US operation and the waiver revocation were violations of the two sides’ agreement. Deputy Foreign Minister Kazem Gharibabadi vowed “decisive actions” in response.
A US official, speaking under customary condition of anonymity before the American strikes took place, said Iran would only get the benefits of its deal with the US if it exhibits good behaviour.
But the official added that negotiators continue to work in good faith towards a final deal, suggesting the US was not ready to abandon the peace process completely.
The end of attacks on commercial shipping and the previous 60-day waiver allowing Iranian oil sales were key elements of the memorandum of understanding that halted fighting between the US and Iran.
That deal was meant to create space for more detailed negotiations on the fate of Iran’s nuclear programme and the future of the strait.
Even so, the memorandum has held only tenuously. In late June, Iran struck a Singapore-flagged container ship in the strait, prompting the US to retaliate and setting off a series of back-and-forth attacks.
And Teheran has repeatedly said it would not allow vessels to transit the waterway without its permission, though it denied any involvement in an attack on a Qatar-linked vessel. US President Donald Trump had pushed for ships to pass freely through the strait as they had done before the US and Israel began attacking Iran in late February.
Bob McNally, president of Rapidan Energy Group and a former White House official, said the waiver revocation “is a signal to a complacent market that the ceasefire may not be as durable and solid as thought. The market has some risk pricing to do”.
The spate of attacks is a reminder of the continued risks to ships crossing through Hormuz, even with military forces protecting vessels that choose to cross by a route near Oman’s coastline.
Iran has also sought to steer commercial ships towards its shores and keep them from using the Omani route, according to US chief of naval operations admiral Daryl Caudle.
He said that Iran had laid mines in the strait as a way of channelling ships nearer to Iran. Their goal is to “force shipping into their side of the actual Strait of Hormuz”, he said.
“The Iranians are determined to show that they are in control of the Strait and that the only way to pass through safely is to take the northern route,” according to Claire McCleskey, co-founder of sanctions advisory firm Clarity Compliance Consulting and a former US Treasury official.
The reversal in the US stance comes just as oil flows and production from the Persian Gulf were starting to approach pre-war levels. US authorisation for sales of Iranian oil played a significant role in calming investor worries about supply shortages and helped tame oil prices.
Now, a return to hostilities and renewed threat to energy flows via the critical strait could once again plunge the global market into renewed volatility.
Global benchmark Brent oil prices touched a peak near US$125 a barrel in late April, two months after the US and Israel launched the military campaign against Iran. Prices returned towards pre-conflict levels this month on growing signs of a recovery.
Talks between the US and Iran were suspended as Teheran began a funeral for the late Supreme Leader Ali Khamenei, who was killed on the first day of the war in late February. Qatar said that the next meeting would be scheduled as soon as possible after the ceremonies. Khamenei will be buried in his hometown of Mashhad on Jul 9.
A key question in the coming days will be whether the US starts imposing fresh sanctions on Iran. That would be a further violation of the interim deal.
“It’s an expression of the administration’s frustration,” David Schenker, a US official for the Middle East during Trump’s first term and fellow at the Washington Institute for Near East Policy, said of the latest US attacks.
“The expectation that Iran was going to comply was overly optimistic,” he said. “This is a war that is dragging on.” BLOOMBERG
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