Global Oil Prices Surge Past $111 as US-Iran Naval Confrontation Looms

In a move that nearly sparked an immediate escalation, Iranian state media claimed today that they had struck a U.S. Navy destroyer with two missiles. However, the Pentagon and CENTCOM have flatly denied these reports, stating that all American military vessels are unharmed and that no kinetic strikes have occurred during today's operations. (AI generated image)

HOME I I HI TECH NEWS I SPORTS I CONTACT

Chokehold: Iran Has the World's Oil in Its Grip, and the U.S. Is Running Out of Options

Daoud Al-Jaber - Middle East Affairs Analysis
Tell Us Worldwide News Network

ABU DHABI - On February 28, the United States and Israel launched coordinated airstrikes on Iran under Operation Epic Fury, targeting military facilities, nuclear sites, and leadership — resulting in the death of Supreme Leader Ali Khamenei. Iran responded with missile barrages on Israeli cities and U.S. bases across the Gulf, including in the UAE, Qatar, and Bahrain.

On March 4, Iran declared the Strait of Hormuz "closed" and threatened to attack any vessel attempting to pass. The move sent shockwaves through global energy markets. Before the conflict, around 20% of global petroleum and 20% of the world's liquefied natural gas traversed the strait each month, with approximately 3,000 vessels using it. Those numbers have now fallen to around 5% of pre-war levels, pushing oil and gas prices sharply higher worldwide.

President Trump launched "Project Freedom" on Monday, framing it in humanitarian terms as an effort to aid stranded seafarers on hundreds of ships stuck in the Persian Gulf since the war began. He had warned the day before that Iranian efforts to halt passage through the strait "will, unfortunately, have to be dealt with forcefully."

Iran's response was swift. Iran's military warned that any foreign armed forces — "especially the aggressive US army" — would be attacked if they approached the strait. Hours later, Iran's semiofficial Fars news agency reported that two missiles struck a U.S. warship at the southern end of the Strait of Hormuz. The U.S. military said it fired on Iranian forces and sank six small boats targeting civilian ships. The UAE meanwhile said it had come under attack, with a major fire breaking out at the Fujairah Oil Industry Zone after Iranian drone strikes. Four missile alerts were issued urging UAE residents to seek shelter — the first such alerts since the ceasefire took effect weeks ago.

Senior U.S. officials said Monday that Washington is edging closer to restarting major combat operations against Iran, with the final decision resting with President Trump and Tehran's new leadership. "We are closer to the resumption of major combat operations than we were 24 hours ago," officials told reporters. The U.S. military "stands ready to respond" and is "rearmed and retooled," they added. Only two U.S.-flagged vessels made it through the strait under military protection on the first day of Project Freedom, and independent analysts warned that scaling up the operation would be extremely difficult.

Al Jazeera's correspondent in Tehran reported that Iran views any U.S. intervention in the strait as a ceasefire violation. "The Iranian military establishment and political officials say that the war has changed many things and that Iran in one way or another is going to keep control over the waterway," the correspondent said.

Iran has submitted a 14-point proposal to end the war, and officials said they were reviewing a U.S. counterproposal delivered through Pakistan. Iran's foreign ministry spokesperson said the U.S. practice of making "excessive and unreasonable demands" made the proposal difficult to engage with. Trump's anticipated visit to Beijing next week adds a further complication. China has called for the reopening of the strait, through which much of its energy supply passes. Treasury Secretary Scott Bessent urged Beijing to use its diplomatic leverage with Tehran, saying, "Let's see if China steps up with some diplomacy and get the Iranians to open the strait."

China and Russia vetoed a UN Security Council resolution in April that called for an end to Iranian attacks and coordinated defensive escorts for shipping. The UK and France have since hosted two international conferences on reopening the strait, with 38 countries signing a statement expressing readiness to ensure safe passage.

Cruise ships reduced activity in the Persian Gulf and stopped using the strait, stranding approximately 15,000 passengers on at least six major vessels. The UK Maritime Trade Operations agency has maintained a critical threat level in the strait, advising mariners to consider routing through Oman's territorial waters instead. Saudi Crown Prince Mohammed bin Salman condemned Iran's renewed strikes on the UAE as unjustified, reaffirming Riyadh's support for Abu Dhabi and underscoring growing regional alignment against Tehran.

As of Tuesday morning, no orders have been given to end the ceasefire — but with both militaries actively exchanging fire, the window for a diplomatic resolution is narrowing rapidly.

This report is based on breaking developments as of May 5, 2026. The situation remains fluid.