A fragile four-week ceasefire between the United States and Iran appears to be on the brink of collapse following a violent exchange of fire in the Persian Gulf on Monday. The flareup drew in the United Arab Emirates (UAE) and sent global oil prices soaring as threats to the strategic Strait of Hormuz intensified.

US Central Command (CENTCOM) reported that American forces fought off an array of Iranian drones, missiles, and small boats while facilitating the passage of two US-flagged vessels. President Donald Trump confirmed via Truth Social that the US had "shot down seven small boats" during the encounter.

The escalation follows Trump's announcement of "Project Freedom," a plan to guide neutral ships—many running low on food—out of the waterway. In response, Tehran’s semi-official Fars news agency claimed the Islamic Republic fired shots at US Navy ships, while Tasnim news agency announced that Iran has "redefined the control zone" in the strait to regulate shipping traffic.

Once again, the conflict expands beyond the U.S., Israel, and Iran dynamic as the UAE blamed an Iranian drone strike for a large fire at the Fujairah Oil Industrial Zone. While the Emirati Defense Ministry stated that three of four incoming cruise missiles were intercepted, the attacks hospitalized three people and prompted the state to issue its first missile alerts to residents since the April 8 ceasefire began.

Former Israeli Prime Minister Naftali Bennett characterized the strikes on the UAE as "a declaration of the renewal of Iran’s war against the allies of the United States and Israel".

Oil markets reacted sharply to the instability. International benchmark Brent jumped more than 5% to trade near $114 a barrel, while WTI crude climbed near $105.

The ongoing war, which began on February 28, has already claimed over 5,500 lives. Despite the violence, President Trump alluded to ongoing discussions with Iranian authorities that "could lead to something very positive," though no details or scheduled meetings were provided to support the claim. Iran continues to maintain that it will only reopen the strait once the US lifts its naval blockade on Iranian ports.

Source: Oil Price.Com 

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