Oil rises after UAE says Adnoc-linked tanker attacked by Iran

• UAE condemns attack in Strait of Hormuz
• Brent crude up 3.4% on news
• US-Iran shipping stand-off continues

Oil prices rose after the UAE strongly condemned an alleged Iranian drone strike on a tanker linked to state-owned Abu Dhabi National Oil Company (Adnoc) as it attempted to pass through the Strait of Hormuz.

Brent crude prices increased by 3.4 percent to about $112 a barrel after the Ministry of Foreign Affairs said the carrier was targeted in an incident involving two drones in a “terrorist attack”. 

It marks an escalation in the conflict and comes hours after Iran claimed it had forced a US warship to turn back in the waterway, as reported by an Iranian news agency. 

Major General Ali Abdollahi, commander of Iran’s Khatam al-Anbia Central Headquarters, warned that any foreign military force – particularly by the US – would be targeted if it approached or entered the Strait of Hormuz.

Global oil prices were trading at less than $70 a barrel before the war began more than two months ago and hit a peak of $126 last week.

Around a fifth of global oil supplies passed through the Strait of Hormuz daily before the conflict began, but a stranglehold on shipping through the strategic waterway has all but halted seaborne exports.

The UAE withdrew from the Organization of the Petroleum Exporting Countries (Opec) last week in a move that will allow it to increase its oil output. Under Opec guidelines, the UAE’s output was capped at around 3.4 million barrels a day, even though Adnoc claims it already has the capacity to produce 4.85 million. 

Adnoc announced plans on Sunday to accelerate a $55 billion growth push with oil project awards as part of an existing $150 billion expansion plan. 

Shipping in the strait is still at a virtual standstill, with just one tanker, a few cargo ships and a cable-laying vessel passing through to the Gulf of Oman so far on Monday, according to data from MarineTraffic, reported by Reuters.

• Maritime rules under strain as chokepoint tensions spread
• US warning on Hormuz ‘toll’ raises risk of sanctions
• Free from Opec, how much can the UAE raise oil output capacity?

On Sunday President Donald Trump announced that the US would “guide” ships out that have been stranded in the Gulf as part of a “humanitarian” effort to restore freedom of navigation through the strait. The US is also continuing a blockade of Iran’s ports. 

In a post on Truth Social, Trump added that his representatives were “having very positive discussions with the Country of Iran, and that these discussions could lead to something very positive for all”. 

Iran said on Sunday it was reviewing a US response to its latest offer for peace talks.