Crude Oil Stabilizes at $114 Following U.S.-Iran Confrontation in Persian Gulf

Table of Contents Oil prices showed modest retreat on Tuesday after experiencing significant upward momentum during the previous session, as global markets monitored deteriorating peace efforts in the Middle East. Brent crude declined 0.3% to reach $114.05 per barrel during Asian trading hours. West Texas Intermediate fell 1.2% to $105.06. Monday had witnessed substantial gains for both benchmarks — Brent climbing over 4% while WTI jumped approximately 6%. The correction came after fresh military engagements erupted between American and Iranian military units in Gulf waters on Monday. The adversaries launched reciprocal attacks while vying for dominance over the Strait of Hormuz, the critical chokepoint handling substantial portions of global petroleum shipments. These confrontations shattered a nearly month-long cessation of hostilities between Washington and Tehran. Tehran’s forces struck infrastructure targets within the United Arab Emirates, specifically hitting an oil terminal at Fujairah port, a strategic installation located beyond the Persian Gulf proper. Emirati authorities reported successfully intercepting Iranian cruise missiles while issuing their first missile warnings to civilians since the truce commenced. 🚨IRAN EXTENDS ITS CLAIMED CONTROL ZONE OVER THE STRAIT OF HORMUZ Iran has redrawn a NEW MAP of the Strait of Hormuz, and the comparison to the OLD MAP exposes the real story. OLD MAP: Iran claimed 12 nautical miles from the Iranian coast, consistent with international maritime… pic.twitter.com/Zvwjv7LDus — Coin Bureau (@coinbureau) May 4, 2026 Tuesday saw hundreds of vessels congregating near Dubai, repositioning away from the Strait of Hormuz as Iran attempted to expand its territorial control over the waterway. U.S. military officials confirmed establishing a transit corridor through the strait. CBS News reported that two American naval destroyers had entered the Persian Gulf. President Trump revealed a new military operation designated “Project Freedom,” designed to provide protection for commercial shipping traversing the Strait of Hormuz and reestablish normal maritime traffic patterns. Military spokespersons confirmed that vessel escort operations had already commenced under this program. Industry experts warned that any positive effects would likely prove temporary. “Any relief from stranded vessels making their way through the Strait will be temporary, with very few inbound vessels moving into the Persian Gulf,” ING analysts wrote. Brent crude has appreciated more than 80% year-to-date as the ongoing conflict has eliminated hundreds of millions of barrels from global supply chains. Surging energy prices are amplifying worries about widespread inflation. Within U.S. Treasury markets, 30-year bond yields crossed the 5% threshold for the first time since July, reflecting increased market expectations that the Federal Reserve might implement interest rate increases. Iranian Foreign Minister Abbas Araghchi acknowledged that negotiations with Washington were “making progress” while cautioning against being “dragged back into quagmire.” President Trump projected the conflict could continue for another two to three weeks. Defense Secretary Pete Hegseth was scheduled to address the media at the Pentagon on Tuesday. “Escalation seems to be the path,” said Carl Larry, oil and gas analyst at Enverus. “Peace is dimming.”