Report · Oil markets · Shipping & chokepoints
Hormuz Under Fire: Iran’s Strike on UAE Oil Infrastructure and the New Gulf Risk Premium
Iran’s strikes on Fujairah extended oil-supply risk beyond the Strait of Hormuz to the infrastructure that bypasses it. The report assesses the remaining export routes and near-term price scenarios.
Co-authored with Benjamin Lozovsky and Michael Wu.
Full report: 11-minute read.
Two near-term Brent scenarios
US$ per barrel · report scenarios
- Contained conflict · base case
- 110–125
Persistent pressure on infrastructure connected to Fujairah.
- De-escalation
- 95–105
Strikes stop and tensions ease.
Conditional forecasts in the May 2026 report, not realised prices. Direct damage to ADCOP or a wider maritime control zone would go beyond the contained base case.
Summary
Iranian strikes on the UAE, the first since a ceasefire took effect on 8 April 2026, sent oil prices up by about 6% and caused a fire at a refinery in the Fujairah port area. Fujairah sits outside the Strait of Hormuz and is the terminus of the Abu Dhabi Crude Oil Pipeline. Crude exports through it had risen 38% since the start of the war. We interpreted the strikes as a political attempt to divide the UAE from its Gulf neighbours.
The report sets out three scenarios. Our base case was a persistent but contained conflict, with further pressure on infrastructure connected to Fujairah and Brent in a range of about US$110–125 a barrel in the near term.
Key findings
Attacking the bypass route is a different risk from threatening the strait. Even partial disruption at Fujairah weakens one of the few remaining outlets for Gulf crude.
The report did not expect a complete collapse of UAE export capacity unless the pipeline was struck directly or a wider maritime control zone around Fujairah was enforced.
Reported covert UAE strikes on Iranian energy infrastructure made de-escalation less likely and miscalculation more likely.
What would change the view
Would weaken the view
- Strikes on the Fujairah area stop and de-escalation follows; the report then expects crude to give back its jump of about US$6 quickly and stabilise between US$95 and US$105.
- Iran pulls back, or the US and Gulf states credibly secure Fujairah and the surrounding sea routes, restoring the security of Gulf exports.
Would move it either way
- Iranian attacks continue or the UAE joins US operations more directly. The report names these as upside risks: consistent with its view that Brent stays elevated, but able to push it above its near-term range of about US$110–125 a barrel.
- Iran strikes the ADCOP pipeline directly or successfully enforces a wider maritime control zone around Fujairah, the only routes the report saw to a complete collapse of UAE export capacity. That would go beyond its contained base case, but bear out its argument that the risk had widened to the infrastructure that bypasses Hormuz.
Conditions as set out in the report when it was published.
Read the full report for the complete analysis.
Read the full report at 6:05 MarketsDated analysis from May 2026. Views reflect the information available at the time and have not been updated. Nothing here is investment advice.