The price of oil rose by about 6% on Monday, driven by the intensification of Iranian attacks on the United Arab Emirates and maritime traffic in the Gulf over the past 24 hours. This marks the most serious escalation since the ceasefire between the United States and Iran came into effect at the beginning of April.
The Brent futures contract increased by $6.27, or 5.8%, to settle at $114.44 per barrel, while the US West Texas Intermediate (WTI) crude gained $4.48, or 4.4%, to close at $106.42.
Iran reportedly struck several ships in the Strait of Hormuz on Monday, including setting an Emirati oil port on fire. President Donald Trump’s attempt to mobilize the US Navy to secure maritime transport has triggered the strongest increase in hostilities since the ceasefire broke down four weeks ago.
The UAE stated that their defense system intercepted missiles and drones on Monday night, while firefighters battled a major oil industrial zone fire following a drone attack from Iran. The US military claimed to have destroyed six Iranian boats and intercepted cruise missiles and drones launched by Tehran as they tried to counter Iran’s efforts to disrupt the new American naval operation aimed at reopening the Strait of Hormuz.
Meanwhile, Iran’s Revolutionary Guard Navy released a map extending Iranian-controlled zones near the Strait of Hormuz to include the Emirati ports of Fujairah and Khorfakkan, as well as the coast of the Oumm al-Qaiwain emirate, according to Iranian news agencies.
Before the US and Israel launched strikes against Iran on February 28, approximately 20% of global oil and liquefied natural gas supplies passed through the strait.
“The oil will stay above $100, and gasoline prices in the US will reach $5 per gallon by June… unless an agreement is reached to reopen the Strait of Hormuz,” analysts from the Eurasia Group consultancy noted in a statement. In California, motorists were already paying up to $6 per gallon of gasoline.
Later in the day, the US military announced that two American merchant ships had successfully crossed the strait, without specifying when. Iran denied any passage.
Iran may have attacked four ships in the Gulf region in the past 24 hours, including vessels from South Korea and the UAE.
An explosion and fire occurred on Monday on a ship operated by South Korean company HMM in the Strait of Hormuz, according to South Korea’s Foreign Ministry.
The UAE accused Iran of drone attacks on an empty oil tanker owned by the Abu Dhabi national company, ADNOC, as it tried to cross the strait.
The United Kingdom Maritime Trade Operations (UKMTO) agency reported an incident involving a cargo ship approximately 36 nautical miles north of Dubai. UKMTO also reported another incident later in the day near the UAE.
Furthermore, the UAE’s Energy Minister, whose country left OPEC last week, stated that they are obligated to produce what the global oil markets demand without restrictions, while cooperating with other oil producers.
OPEC and its allies, known as OPEC+, announced that they would raise oil production targets by 188,000 barrels per day in June for seven members, marking the third consecutive monthly increase.
