Oil surges above US$110 as Gulf drone attacks and Iran standoff shake global energy markets

GLOBAL oil prices extended sharp gains on Monday as mounting fears of a prolonged US-Iran confrontation and fresh attacks on Gulf infrastructure intensified concerns over energy security and maritime supply routes.

Reuters reported today that markets reacted nervously after a drone strike targeted the Barakah Nuclear Power Plant in the United Arab Emirates and amid reports that US President Donald Trump is preparing to review military options relating to Iran.

Brent crude futures climbed US$1.44, or 1.32 per cent, to US$110.70 a barrel by 2337 GMT after earlier reaching their highest level since May 5.

US West Texas Intermediate crude also surged, rising US$1.84, or 1.75 per cent, to US$107.26 a barrel after touching its strongest level since May 4.

Both benchmark contracts had already gained more than seven per cent last week as hopes faded for a diplomatic breakthrough capable of ending attacks and shipping disruptions around the Strait of Hormuz, one of the world’s most strategically vital oil transit corridors.

Investor confidence weakened further after recent discussions between Trump and Chinese President Xi Jinping concluded without any indication that Beijing would intervene diplomatically to help resolve the conflict.

Fresh drone attacks targeting Gulf states have further heightened fears that the confrontation could expand into a broader regional energy crisis.

Emirati officials confirmed they were investigating the source of the strike on the Barakah nuclear facility and stressed that the UAE reserved the right to respond to what they described as “terrorist attacks”.

Meanwhile, Saudi Arabia announced that it had intercepted three drones entering its airspace from Iraq and warned that it would take all necessary operational measures to protect its sovereignty and national security.

Analysts said the latest incidents demonstrated the growing vulnerability of Gulf energy infrastructure to proxy warfare linked to the Iran conflict.

“These drone strikes are a pointed warning — renewed US or Israeli strikes on Iran could trigger more proxy attacks on Gulf energy and critical infrastructure by Iran or its regional proxies,” said IG market analyst Tony Sycamore.

Market anxiety has also intensified following reports that Trump is expected to convene senior national security advisers on Tuesday to discuss possible military responses involving Iran.

The worsening geopolitical climate has fuelled concerns over further supply disruptions in global oil markets already under strain from maritime instability, shipping delays and rising insurance costs linked to the Gulf conflict.

The Strait of Hormuz remains central to market fears, with a substantial proportion of the world’s crude oil and liquefied natural gas exports passing through the narrow waterway each day. Any prolonged interruption to traffic there could send energy prices significantly higher and deepen inflationary pressures worldwide. - May 18, 2026