Iranian strikes on Fujairah send Brent above $120, U.S. yields rise

Iranian drones struck the Fujairah Oil Industry Zone on Monday. The UAE Ministry of Defence detected four munitions coming from Iran and reported that three were intercepted over the country’s territorial waters while a fourth fell into the sea. Two passenger flights to Dubai were diverted and three Indian workers at the hub were reported moderately injured. Authorities said loading operations at the terminal, the endpoint of a pipeline built to bypass the Strait of Hormuz, have been partly suspended after multiple strikes over four days.

Brent crude rose more than 5% on the attack, trading above $120 a barrel as traders priced the risk of further disruption to UAE exports. Officials reported a tanker was struck north of the port over the weekend and local accounts indicated fires at the port following Monday’s strikes.

Financial markets reacted sharply. The 10-year U.S. Treasury yield climbed to 4.46%, a nine-month high. Traders sold government bonds, which pushed prices down and yields up. Federal funds futures now imply no Federal Reserve rate cuts until December 2027 and place about a 38% probability on a rate increase by March 2027.

The strikes ended a fragile ceasefire between the United States and Iran that took effect on April 8. Brigadier General Ibrahim al‑Fiqari posted on X that ‘Tonight, perhaps, a new chapter of power will unfold, one the adversaries have never witnessed before,’ warning of possible further escalation. The UAE Ministry of Defence wrote that ‘the sounds heard in scattered areas of the country are the result of the successful interception of the aerial threats.’

Analysts at the Kobeissi Letter wrote that higher oil prices could raise gasoline and mortgage costs, and that those developments would put pressure on the bond market.

Authorities continue to monitor the situation while investigations and repairs proceed. The injuries at the Fujairah hub were described as moderate and no fatalities were reported.