Oil prices extended their sharp rally on Thursday after the United States launched a second day of strikes against Iranian military targets and President Donald Trump declared the interim ceasefire with Tehran had ended. Brent crude futures added more than 1 percent to trade near $79 a barrel, building on a 5 percent surge in the previous session, while West Texas Intermediate climbed above $74. The benchmarks had earlier touched their highest levels in over two weeks, reversing weeks of steady declines that followed the signing of a memorandum of understanding between Washington and Tehran in June.

The trigger for the renewed hostilities was a series of attacks on commercial tankers transiting the Strait of Hormuz, which US Central Command attributed to Iran. Washington responded with strikes on approximately 90 Iranian military sites along the coastline, including air-defence systems, missile storage and naval infrastructure, and revoked the sanctions waiver that had allowed Iranian crude sales to resume. Iran said it had struck US military facilities in Bahrain and Kuwait in retaliation. The strait, through which roughly one-fifth of global oil and liquefied natural gas supplies passed before the war, remains the central pressure point: shipowners and war-risk insurers have advised vessels to suspend passages, and analysts in London and Singapore note that the rush of tanker traffic seen in recent weeks has halted.

The price spike rippled through global markets, reigniting inflation concerns that had eased during the brief truce. Bond yields jumped, with US 10-year Treasuries rising 10 basis points on the week and Japanese government bond yields hitting their highest since 1996. Fed funds futures now imply around 38 basis points of tightening this year, up sharply from earlier expectations. Equity markets were mixed: Asian bourses recovered some ground as chipmakers rallied on bargain-hunting, but the flare-up in the Gulf capped gains. Viewed from Frankfurt and New York, the renewed risk premium in crude is complicating central bankers’ efforts to gauge the persistence of price pressures.

Trump later said he did not expect a return to full-scale war and claimed Iranian officials had reached out seeking a deal, though he cast doubt on their sincerity. The 60-day negotiation window agreed in June remains technically open, but analysts in the Middle East and Europe assess that the latest escalation has severely eroded confidence in the process. The next factual milestone will be whether tanker traffic through Hormuz resumes at scale in the coming days, and whether the US and Iran can re-establish even a tacit modus vivendi to prevent a prolonged supply disruption.