Brent Crude, the primary benchmark for oil prices worldwide, climbed at the start of the week amid reports that Iran carried out strikes on the UAE and markets worried over the Strait of Hormuz
Oil prices have jumped as tension rises in the Strait of Hormuz, threatening the ceasefire between the US and Iran.
The Middle East has been in conflict since February 28 when the US and Israel carried out joint strikes on several key Iranian sites. Iran retaliated by striking sites across the region and closed the critical Strait of Hormuz trade route, through which 20% of global oil traded passes.
The US implemented a blockade on Iranian ports in the strait in a bid to strangle the Iranian economy, lift the closure and pressure peace negotiations. Trump has said his country will guide commercial vessels of countries not involved in the conflict out of the trade route, but markets remain worried.
Brent Crude, the primary benchmark for oil prices worldwide, climbed 6 percent on Monday to $114.44 a barrel. Brent futures eased somewhat on Tuesday morning, trading at $113.54 as of 2.00am GMT, Al Jazeera news agency reported.
The US military said it had destroyed six of Iran’s small boats in response to Iranian attacks on commercial vessels and the United Arab Emirates reported attacks from Iranian missiles and drones.
Analysts have been quoted as saying that the market factoring more oil infrastructure damage and a higher likelihood that the strait will be closed for an extended period, driving the oil price higher.
The UAE said it had engaged a number of missiles and drones launched from Iran on Monday, May 4.
The defence ministry said its air defence systems engaged 12 ballistic missiles, three cruise missiles and four drones.
It is understood that one missile struck a petroleum site in the eastern emirate of Fujairah. Fujairah’s Media Office said a drone sparked a fire at the site.
US President Donald Trump said on Monday that the US military would “guide” commercial vessels through the Strait of Hormuz.
There has not been a substantial resumption of maritime traffic in the region.
United Kingdom Maritime Trade Operations reported that a ship was struck 36 nautical miles north of Dubai. It is understood that a fire broke out in the engine room. All crew are accounted for.
The International Maritime Organisation has said that up to 20,000 seafarers remain stranded on some 2,000 vessels in the Strait of Hormuz.
