Oil prices surged due to escalating tensions in the Strait of Hormuz, jeopardizing the fragile peace between the US and Iran. The Middle East has been embroiled in conflict following joint strikes by the US and Israel on key Iranian sites. In response, Iran targeted various locations and closed the vital Strait of Hormuz trade route, a passage crucial for 20% of the world’s oil trade.
To exert pressure on Iran and facilitate peace talks, the US enforced a blockade on Iranian ports in the strait. President Trump pledged to escort non-participating countries’ commercial vessels out of the area, but concerns linger in the markets. Brent Crude, the global oil price benchmark, saw a 6% surge to reach $114.44 per barrel on Monday, although it slightly dipped to $113.54 on Tuesday morning.
Amid the escalating situation, the US military reported destroying six Iranian small boats in retaliation for attacks on commercial ships, with the United Arab Emirates also facing missile and drone strikes from Iran. Analysts foresee a rise in oil prices due to potential infrastructure damage and an extended closure of the strait.
On May 4, the UAE encountered missile and drone attacks from Iran, with the defense ministry confirming engagement with a significant number of projectiles. The strikes resulted in damage to a petroleum site in Fujairah, ignited by a drone. President Trump announced plans for the US military to provide guidance to vessels navigating the Strait of Hormuz, although maritime traffic in the region remains limited.
Furthermore, a ship suffered an incident 36 nautical miles north of Dubai, leading to an engine room fire but with all crew members safely evacuated. The International Maritime Organization highlighted the plight of around 20,000 stranded seafarers on approximately 2,000 vessels in the strait.