OPINION | Geopolitical volatility resurfaces in the Persian Gulf

The recent respite from conflict that offered the global economy a measure of relief now appears increasingly precarious, as geopolitical risk has returned to the Persian Gulf in dramatic fashion. Over July 7-8, the United States and Iran once again exchanged military strikes, following Tehran’s attack on three crude oil tankers transiting the Strait. Iranian media claimed that the LNG carriers were struck “after ignoring repeated warnings.”

In response, US Central Command (CENTCOM) announced that its forces had carried out a series of strikes on July 7, targeting more than 80 Iranian military installations. These included air defence systems, command and control facilities, coastal radar sites, and anti‑ship missile batteries. The operation also destroyed over 60 Islamic Revolutionary Guard Corps (IRGC) fast attack boats operating in and around the Strait of Hormuz. Iran responded with strikes on US bases in Bahrain and Kuwait, which underscored the fragility of the ceasefire agreed only weeks earlier and reminded global markets of the enduring vulnerability of the Strait of Hormuz, the world’s most critical energy chokepoint.

As part of its retaliation, Washington cancelled its sanction waiver for Iranian crude, underscoring the volatility of the sanctions landscape. That waiver had been part of a 14‑point memorandum of understanding concluded in mid‑June, which temporarily authorised the production, delivery, and sale of Iranian crude oil, petrochemical products, and refined petroleum through August 21, 2026. The Trump administration’s two‑month concession allowed Tehran to clear nearly half of its floating storage, offering a brief reprieve. Parallel diplomatic efforts had seen Israel and Lebanon announce a ceasefire framework in early June, later expanded into a trilateral arrangement with US support. Yet the renewed confrontation between Washington and Tehran has revealed how tenuous these arrangements remain.

The Strait of Hormuz had witnessed a marked uptick in traffic in recent weeks, as vessels rushed to move cargoes out of the chokepoint amid renewed uncertainty. Iran, struggling to secure buyers in Asia outside China even before Washington rescinded its sanctions waiver, finds its oil sales constrained again almost as soon as they resumed. Since the memorandum of understanding was signed in mid‑June, Tehran had accelerated loadings from its key export hub at Kharg Island, pushing tankers out of the Gulf after weeks of near‑total paralysis under the US blockade that began in mid‑April. The surge in shipments toward the Malacca and Singapore Straits briefly offered Iran a lifeline, but with the waiver now revoked, sanctions are once again firmly in place. China remains Iran’s principal customer, while other refiners hesitate to commit amid the shifting sanctions environment.

Meanwhile, the United States broke another oil output record, pumping close to 14 million barrels per day, while the UAE exported at all‑time highs as it emptied storage tanks filled during the earlier closure of Hormuz. As the US and Iran traded new attacks, oil prices spiked 6% on fears of disruption, with Brent futures climbing to $78.58 and WTI futures to $74.76.

Despite the fresh flare-up in the Middle East, more vessels appear to be reconsidering moving toward the chokepoint, but for tanker owners and operators, the dilemma is which route to choose. The northern route, closer to the Iranian coast, likely requires approvals from Tehran to proceed. The southern passage, hugging Oman’s coastline and thought to be under US protection, was the very corridor where Iran struck three commercial vessels on Tuesday. The Omani Route has emerged as a vital corridor for container, crude, chemical, LPG, and product tanker movements. Yet traffic patterns remain fragmented across Iranian, Omani, IMO, and “dark” or unknown routes, reflecting the conditional nature of risk: some activity may be temporarily authorised, while vessels and networks remain exposed to secondary sanctions. The choice of route has become emblematic of the broader uncertainty: neither path offers guaranteed safety, and both underscore how fragile the security environment in Hormuz remains.

Amid these developments, speculation has grown over whether Iran and Oman might impose tolls on tankers transiting Hormuz. Bloomberg reported that some European countries were preparing for such an eventuality, with Gulf officials privately acknowledging the possibility. Officially, both Gulf states and Washington insist maritime law would not permit such tolls, warning that if imposed, they would set a precedent for other countries controlling critical waterways.

The latest conflagration underscores the conditional nature of risk in the Gulf. On July 1, the crude oil tanker Sanmar Herald arrived safely at Paradip Port in India after encountering hostilities in Hormuz. Carrying Basrah Medium and Basrah Heavy crude from Iraq, the vessel faced prolonged delays while attempting to transit the Strait. Operating in coordination with the Indian Navy, it resumed its voyage only after the Strait reopened. Such incidents highlight the vulnerability of energy flows and the direct exposure of Asian importers to Gulf instability.

Diplomatic rhetoric remains unpromising. President Trump warned that the US would either “make a deal with Iran or finish the job,” while Iranian Foreign Minister Abbas Aragchi declared that talks on a final peace deal “will not commence if threats continue.” The temporary waiver had opened the door for Iranian oil sales in Asia, but refiners remain cautious, uncertain how long the conditions will last. Reports indicated that Indian state‑held refiners were considering purchases of Iranian crude if the waiver were extended beyond August. With the peace process faltering, this is unlikely to proceed as the Indian government has consistently sought to avoid controversy with Washington over purchases of Iran’s sanctioned oil.

Waivers, ceasefires, and temporary authorisations provide fleeting relief, but they coexist with enforcement actions, retaliatory strikes, and fragile diplomacy. The Strait of Hormuz remains operational, but traffic is fragmented, sanctions are shifting, and the threat of escalation persists. For global energy markets, the lesson is clear: geopolitical risk has returned to the Persian Gulf, and while temporary relief may ease flows, the underlying instability ensures that volatility will remain a defining feature of oil movements in the months ahead.

The writer is a security and economic affairs analyst.

The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.