Oil is surging on fears that the Iran War is about to heat up again
AFP via Getty Images
- Oil prices spiked as traders reacted to fresh tensions in the Middle East on Monday.
- The UAE reported missile strikes from Iran for the first time since the ceasefire began.
- US stocks dropped as oil extended its surge around midday.
Oil prices logged fresh gains and stocks tumbled on Monday as traders assessed the possibility that the Iran war could heat up again.
Oil extended gains after reports that Iran launched missiles at the United Arab Emirates for the first time since the ceasefire went into effect in early April. US President Trump said that the US has sunk seven small Iranian ships.
Brent oil was up about 6% to $114.60, while WTI oil rose 4% to $105.57,
The UAE's Ministry of Defense said that four missiles were launched from Iran. The government agency said it intercepted three missiles and that the fourth went into the Persian Gulf.
Four cruise missiles launched from Iran were detected toward various areas across the country. Three were successfully engaged over the country’s territorial waters, while one fell in the sea.
— وزارة الدفاع |MOD UAE (@modgovae) May 4, 2026
The Ministry of Defense affirmed that the sounds heard in different parts of the… pic.twitter.com/ugwPRCcY24
Major indexes tumbled after wavering earlier in the session. Bond yields spiked, with the 10-year US Treasury yield up seven basis points to 4.45%
Here's where major indexes stood around 1:30 p.m. ET:
- S&P 500: 7,207.98, down 0.3%
- Dow Jones Industrial Average: 49,108.01, down 0.8% (--410.22 points)
- Nasdaq Composite:27,659.47, down 0.2%
The strikes come during an indefinite ceasefire extension amid talks between the US and Iran. Israel has also reportedly violated the ceasefire agreement.
US President Trump reacted to the UAE strikes in a Truth Social post on Monday afternoon, saying that Iran has shot at a South Korean cargo ship.
Trump said that the US had shot down seven small boats which he said is "all they have left."
@realDonaldTrump via Truth Social
In response to Iran's latest peace proposal, Trump recently said he "can't imagine that it would be acceptable in that they have not yet paid a big enough price for what they have done to Humanity."
Trump said in a Truth Social post on Sunday that the US military will escort third party ships out of the Strait of Hormuz in what the president called "Project Freedom."
In response, Ali Abdollahi, the head of the Iranian military's unified command, warned that US ships in the Strait of Hormuz will be attacked, according to reporting from Aljazeera.
Trump told Fox News that Iran will be "blown off the face of the earth" if they attack US ships guiding vessels through Strait of Hormuz.
Investors have traded the TACO moniker, which stands for Trump always chickens out for NACHO, meaning not a chance Hormuz opens, as the war in Iran drags on.
Hamidreza Azizi, an expert on Iranian foreign and security policy, explained that Iran is expanding its control over the Strait of Hormuz. This further escalates the conflict and sustains high oil prices, putting pressure on Trump to come to a resolution.
#Iran’s announcement of an expanded control envelope in the Strait of Hormuz - coupled with strikes on oil facilities in Fujairah and strikes on oil tankers - points to a deliberate escalation toward the United Arab Emirates’ oil export bypass routes.
— Hamidreza Azizi (@HamidRezaAz) May 4, 2026
The objective is to keep…
Former JPMorgan quant Marko Kolanovic reacted to news of the UAE strikes on X, saying the US has to respond.
US simply has to respond to these large attacks on UAE. This is much worse than just "misbehaving " and Trump said he will strike in that case. Otherwise US loses all credibility, can just pack up and leave.
— Marko Kolanovic (@markoinny) May 4, 2026