Oil Prices Jump 6% as Iran Sets UAE Oil Port Ablaze, Strikes Vessels in Strait of Hormuz

Oil prices jumped about 6% on Monday as Iran stepped up attacks on the United Arab Emirates and ships in the Middle East Gulf over the past 24 hours, the most serious escalation since a U.S.-Iran ceasefire came into force in early April.

Brent futures rose $6.79, or 6.3%, to $114.96 per barrel at 12:54 p.m. EDT (1654 GMT), while U.S. West Texas Intermediate (WTI) crude rose $4.23, or 4.2%, to $106.17.

A South Korean ship was hit by an explosion in the Strait of Hormuz on Monday and Iranian drones caused a fire at a UAE oil port, as Tehran demonstrated its grip on Middle East oil after U.S. President Donald Trump said his Navy would open the strait.

The U.S. military said it destroyed six Iranian small boats and intercepted Iranian cruise missiles and drones fired by Tehran as the U.S. launched an operation to free up shipping through the Strait of Hormuz, U.S. Admiral Brad Cooper, the head of Central Command, said on Monday.

Iranian military officials, meanwhile, denied that Iranian small boats were sunk.

About 20% of global oil and liquefied natural gas supplies passed through the strait before the U.S. and Israel launched strikes against Iran on February 28.

Iran’s Revolutionary Guards Navy issued a map that it said was expanding the areas controlled by Iran near the Strait of Hormuz to include the UAE’s ports of Fujairah and Khorfakkan as well as the coast of Umm Al Quwain emirate in the UAE, according to Iranian news agencies.

“The path for prices remains skewed to the upside as long as flows through the strait remain restricted,” UBS analyst Giovanni Staunovo said.

Earlier in the day, the U.S. military said two U.S. merchant ships had made it through the strait, without saying when. Iran denied any crossings had taken place.

Iran Hits Other Vessels Too

Including the South Korean vessel, Iran may have attacked four ships in the Gulf region over the past 24 hours.

Earlier, the UAE accused Iran of attacking an empty crude oil tanker belonging to Abu Dhabi state oil firm ADNOC with drones as it attempted to transit the Strait.

The United Kingdom Maritime Trade Operations (UKMTO), meanwhile, said it received a report of an incident involving a cargo vessel about 36 nautical miles north of Dubai. The UKMTO also reported a separate incident earlier in the day near the UAE.

The energy minister in the UAE, which left OPEC last week, said the country owes it to its investment partners to produce what global oil markets require without restrictions, while cooperating with other crude producers.

OPEC and its allies, known as OPEC+, said they would raise oil output targets by 188,000 barrels per day in June for seven members, marking the third consecutive monthly increase.

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(Reporting by Scott DiSavino in New York and Ahmad Ghaddar in London; Additional reporting by Florence Tan and Sudarshan Varadhan; Editing by Louise Heavens, Bernadette Baum, Paul Simao, Will Dunham, Alexander Smith and Deepa Babington)

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