Brent crude held above $113 a barrel on Tuesday after surging nearly 6 percent in the previous session, as renewed military confrontation in the Strait of Hormuz shattered what remained of a fragile ceasefire and pushed global oil markets back toward crisis mode.
The benchmark climbed as high as $114.44 during Monday’s rally, its highest level since mid-2022, before easing slightly to around $113.54 by early Tuesday morning. U.S. West Texas Intermediate (WTI) futures settled at $106.42 per barrel, having advanced more than 4 percent in the same session.
A Ceasefire in Name Only
The latest escalation came after U.S. naval forces destroyed six Iranian small boats that had attacked commercial vessels transiting the strait. In parallel, the United States military launched Operation Project Freedom, an escort mission aimed at restoring limited navigation through the waterway. Two U.S.-flagged commercial ships completed the passage under military protection on Monday, though the operation did little to calm markets.
Iran’s response underscored how far the situation remains from resolution. Iranian forces launched a large-scale missile and drone assault against the United Arab Emirates (UAE), with Abu Dhabi’s air defense system engaging 12 ballistic missiles, three cruise missiles, and four drones in a single operation, according to the UAE’s defense ministry. Three people were injured. A fire broke out at the UAE’s Fujairah oil hub, one of the region’s critical export facilities outside the strait itself, after a separate Iranian drone strike, confirmed by Reuters.
The attack on Fujairah is particularly significant. It signals that even energy infrastructure positioned beyond the strait’s immediate boundaries may not be insulated from the wider conflict.
Shipping Remains Paralysed
The International Maritime Organization (IMO) has reported that roughly 20,000 seafarers remain stranded aboard approximately 2,000 vessels in the Persian Gulf, a situation the agency says has no precedent in the modern era. The International Transport Workers’ Federation (ITF) urged caution, with its General Secretary Stephen Cotton warning that Operation Project Freedom should not be treated as a signal for commercial shipowners to resume normal operations. “Until we have those assurances, we are calling on shipowners and flag states not to treat this announcement as a green light,” Cotton told Al Jazeera on Tuesday.
Insurance costs for tankers operating near the strait have risen sharply, reinforcing the reluctance of many commercial operators to move vessels without clearer guarantees from both sides.
A Structural Price Premium
Analysts increasingly warn that unless a durable U.S.-Iran political agreement restores confidence in uninterrupted navigation, oil will continue trading at a substantial geopolitical premium. Sparta analyst Anisha Goh told CNBC that prices are likely to climb further as nations draw down energy stockpiles. Morgan Stanley’s chief Europe economist Jens Eisenschmidt described oil market turbulence as “visibly increasing in the system,” adding that the situation risks triggering a broader day of reckoning across inflation-sensitive sectors including airlines, manufacturing, and food supply chains.
The Strait of Hormuz carries roughly 20 percent of global seaborne oil trade. In 2024, approximately 84 percent of crude oil shipments through the strait were destined for Asian markets.
For import-dependent economies already managing inflation, elevated crude prices translate directly into higher transport, manufacturing and consumer costs. Markets are now weighing two realities at once: a U.S. military operation attempting to reopen a critical artery, and the growing recognition that barrels of oil cannot flow freely without a political settlement to match.
