Global oil prices top $114 and settle at 4-year high after Iranian attacks on U.A.E. revive worries of further supply disruptions

By Isabel Wang and Barbara Kollmeyer

U.A.E. issues a missile-threat alert for the first time since the U.S. and Iran agreed to a cease-fire in early April

Investors reacted Monday to the continued uncertainty over the shutdown of ship traffic through the Strait of Hormuz

Global oil prices on Monday surged back above $114 per barrel and settled at its highest level in nearly four years, after Iran ramped up attacks on energy facilities in United Arab Emirates and ships in the Strait of Hormuz, marking the worst escalation in Middle East tensions ever since the U.S.-Iran cease-fire about a month ago.

The United Arab Emirates on Monday issued a missile-threat warning for the first time since the U.S. and Iran agreed to the cease-fire in early April, and the Associated Press reported that an Iranian drone sparked a fire at an oil facility in the U.A.E.'s eastern emirate of Fujairah.

Fujairah is the Emirates' primary port and oil-storage facility on the Gulf of Oman and has been used during the Iran war to ship some oil to avoid going through the Strait of Hormuz, which remains closed to commercial traffic since early March.

Brent crude futures for July delivery (BRN00) (BRNN26) popped over 5.8% to $114.44 a barrel, its highest settlement value since June 21, 2022. It was also the largest one-day advance for the global benchmark since April 2, according to Dow Jones Market Data.

West Texas Intermediate crude saw its June contract (CL00) (CLM26) climb 4.4% to end at $106.42 a barrel, according to FactSet data.

Investors also weighed conflicting reports of an Iranian strike on a U.S. warship in the Strait of Hormuz on Monday morning. In a post on X, an account for Iran's Fars News Agency said that two Iranian missiles struck a U.S. Navy ship after it "violated security protocols for transit and navigation with the intent to pass through the Strait of Hormuz" and ignored warnings from the Iranian navy.

But U.S. Central Command denied that report and said "no U.S. Navy ships have been struck. U.S. forces are enforcing the naval blockade on Iranian ports."

The latest development came after President Donald Trump said in a post on Truth Social over the weekend that the U.S. would launch a new effort starting Monday called Project Freedom to help get ships from neutral countries moving through the vital waterway.

Trump also said there had been "very positive discussions" with Iran, which "could lead to something very positive for all," although he didn't provide details on either development.

Brent crude futures topped $125 a barrel last Thursday, at nearly a four-year high, but also closed lower on the month.

In a largely symbolic move, the members of the Organization of the Petroleum Exporting countries and its allies, known as OPEC+, announced Sunday that they would raise daily oil output by 188,000 barrels as the conflict continues to stifle global oil supply. That output increase doesn't count production by the U.A.E., which dropped out of OPEC and OPEC+ effective May 1.

"OPEC announced a slight increase in production quotas, but with many members struggling to move oil due to near-closure conditions in the Strait of Hormuz, the decision is unlikely to impact short-term price dynamics," said Ipek Ozkardeskaya, senior analyst at Swissquote. "In the longer run, more supply should mean lower prices, but for now the global economy will continue to grapple with high energy costs."

Geopolitical uncertainty and hectic diplomacy between the U.S. and Iran suggest that volatility in oil prices will persist, she added.

-Isabel Wang -Barbara Kollmeyer

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05-04-26 1543ET