US-Iran exchange fire in Hormuz, sparking fresh oil rally

The uneasy American truce in the Iran war seems broken after the US military said it sank several Iranian small boats that attempted to interfere with commercial shipping.

The situation is worsened after the United Arab Emirates said its air defences intercepted ballistic and cruise missiles fired from Iran, and a fire at an oil facility in Fujairah was reported after a drone attack.

Reports say the shooting spree started during a US forces attempt to escort vessels through the blockaded waterway.

US President Donald Trump said, “We’ve shot down seven small boats or, as they like to call them, ‘fast’ boats. It’s all they have left.” 

Helicopters were used in the strikes.

However, Iran has denied that any such attack took place, although it has yet to issue an official statement.

Al Jazeera’s correspondent in Tehran, however, reported that an Iranian military official told state media that Iran had no plan to attack the UAE. Nevertheless, the UAE reported that its key oil port at the Port of Fujairah was hit, causing a fire and injuring three people.

UAE officials said air defences intercepted missiles and drones during the incident.

Today’s shooting in the Gulf has sparked an oil rally.

Benchmark Brent crude futures surged early on Tuesday as they jumped 5.8% to $114.44 (S$146.14) a barrel. Murban, a benchmark for Gulf crude, also climbed, gaining 3.4% to $107.30 on Tuesday in Tokyo, reflecting market sentiment over challenges to the energy channel.

The United States is trying to move stranded ships out of the Strait of Hormuz under what Trump has called “Project Freedom.” An estimated 20,000 seafarers on 2,000 ships have been stuck since the US-Iran war began in February. 

A shipping company told the BBC that one of its US-flagged vessels safely exited the Gulf under American military support. Maersk said the transit was “completed without incident, and all crew members are safe and unharmed.”

On Sunday, Trump said the US would start helping stranded vessels out of the shipping lane as part of “Project Freedom,” also saying that the US had been asked by countries “from all over the World” to help free up their ships, which were “locked up in the Strait of Hormuz” and were “merely neutral and innocent bystanders!”

Iran has called the “Project Freedom” as “Project Deadlock.”