Brent Crude Holds Near $114 As US-Iran Fire Exchange In Hormuz Threatens Fragile Middle East Ceasefire

Global oil prices held steady on Tuesday morning, retaining the bulk of Monday's sharp gains after a significant military escalation in the Middle East rattled energy markets. The uptick comes as a direct response to a flareup in hostilities between the US and Iran, casting immediate doubt on the viability of a month-long ceasefire.

Brent crude futures traded near $114 a barrel, having surged nearly 6% during the previous session. Meanwhile, West Texas Intermediate (WTI) hovered just below the $105 mark. The rally reflects a significant "war premium" as the Strait of Hormuz — the world's most vital oil artery — remains effectively impassable.

The latest volatility follows a report from US Central Command confirming that the US military fought off Iranian attacks while escorting two US-flagged vessels through the waterway. Adding to the supply concerns, an oil terminal in Fujairah, UAE, was reportedly hit by drone and missile fire.  

ALSO READ: 'Iran Will Be Blown Off If...': Trump Issues Warning Amid Hormuz Deadlock

Ceasefire at Risk: Hostilities have intensified as Washington attempts to clear a path for stranded vessels, a move Tehran appears to view as a provocation.

• Trump's Warning: Speaking to Salem News Channel, US President Donald Trump indicated the conflict could persist for another two to three weeks, warning that any direct targeting of US ships would meet severe consequences.
• Iranian Stance: Iranian Foreign Minister Abbas Araghchi stated that while talks were "making progress," the US and UAE must avoid being "dragged back into a quagmire."

In a note on Monday, Goldman Sachs highlighted that while global inventories haven't reached critical lows, the pace of drawdowns is concerning. Total global stocks currently stand at approximately 101 days of demand, but are projected to fall to 98 days by the end of May. The bank warned that easily accessible buffers of refined products, such as jet fuel and naphtha, are being depleted rapidly due to regional export restrictions.

ALSO READ: UAE Suspends Dubai, Sharjah Flights After Iranian 'Drone Strikes'

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