IN SHORT: The fragile US-Iran ceasefire came under severe strain on May 4 as Iran launched drone and missile attacks on the UAE, including the Fujairah fuelling hub, in direct response to the US Navy’s Project Freedom operation escorting neutral ships through the Strait of Hormuz. Brent crude surged 5.8% to $114.44, its highest 2026 closing price. Oil pulled back to approximately $109.87 on May 5 after the US said the ceasefire technically remained intact. Goldman Sachs warned that easily accessible refined product buffers are being depleted rapidly, with South Africa, India, Thailand and Taiwan facing elevated scarcity risk.
The Strait of Hormuz crisis escalated sharply on May 4 as the US and Iran exchanged fire for the first time since the ceasefire was announced four weeks ago, driving Brent crude to its highest 2026 close at $114.44 and reducing commercial shipping through the world’s most critical oil artery to just four ships, against a pre-war average of more than 120 per day.
The escalation followed the launch of Project Freedom, Trump’s operation to escort neutral ships out of the Gulf using two destroyers, more than 100 aircraft, unmanned platforms and 15,000 personnel. Iran responded with drones and missiles targeting Fujairah, one of the UAE’s most important fuelling hubs, while the US military shot down Iranian drones and destroyed seven Iranian fast boats.
- Brent crude closed at $114.44 on May 4, a gain of 5.8%, its highest close of 2026 and a level that exceeded the previous peak reached in late March when Iran first closed the strait. West Texas Intermediate rose more than 4% to close above $106. The VIX volatility index spiked again and the Dow Jones fell nearly 560 points, or 1.1%, as markets repriced the risk that the ceasefire had effectively ended.
- On May 5, Defence Secretary Pete Hegseth said the ceasefire technically remained in place, describing Iran’s attacks as falling “below the threshold of restarting major combat operations.” Brent pulled back approximately 4% to close at $109.87, with WTI settling at $102.27. The relief was partial: the strait remains effectively closed to commercial traffic, Iran’s mines remain in place, and analysts described the ceasefire as deeply fragile.
- Goldman Sachs released a market note on May 5 warning that easily accessible buffers of refined products are being depleted rapidly, particularly petrochemical feedstocks such as naphtha and LPG, as well as jet fuel. Total global oil stocks, including crude and refined products held both on land and at sea, stand at approximately 101 days of demand and could fall to 98 days by end of May. “Our estimates of supply of refined products and countries’ own crude stocks point to higher risks of product scarcity in South Africa, India, Thailand, and Taiwan,” the bank’s analysts wrote.
- Chevron CEO Mike Wirth told the Milken Institute on May 5 that fuel shortages were a growing concern in some regions of the world. “I think as people look at the realities of very tight supplies, it’s not just a question of price,” he said. He added that even if the strait reopened tomorrow, normalisation would take months as seas must be cleared of Iranian mines, hundreds of stranded ships must exit the Gulf to be redeployed, and insurance companies must become comfortable enough to underwrite tanker voyages.
- Iraq has reportedly been offering its term buyers steep discounts for crude loaded this month, but tankers must be willing to transit the Hormuz strait to collect the barrels, severely limiting uptake. Only four ships crossed the strait on May 4, the day Project Freedom launched. Before the war, the waterway handled more than 120 ship crossings per day, carrying roughly 20% of global seaborne oil supply and approximately 20 million barrels per day.
- For Africa, Goldman Sachs naming South Africa explicitly as a country facing elevated refined product scarcity risk is a significant warning. South Africa imports all of its petroleum requirements and has already suffered three consecutive monthly fuel price shocks. Diesel hits R32 per litre on May 6, and the Treasury’s levy relief expires July 1. If physical product shortages materialize alongside price pressure, the economic damage would be substantially worse than what is currently captured in inflation forecasts.
- Trump warned on Fox News that Iranian forces would be “blown off the face of the earth” if they hit a US ship in the strait. Iranian Foreign Minister Abbas Araghchi said recent events “make clear that there is no military solution to a political crisis.” Iran has submitted a 14-point peace proposal via Pakistani mediators; the US has not responded affirmatively.
Oil analyst Rory Johnston captured the mood in a single phrase on social media: “You could say the ceasefire has ceased.”
The Bigger Picture: The Hormuz crisis has now moved into a new and more dangerous phase. The Project Freedom operation attempted to demonstrate that the US could restore shipping without a peace deal. Iran’s immediate military response demonstrated that it could not. The strait is not a lane that can be unilaterally declared open when one of its two bordering nations is actively shooting at ships and drones. For Africa, the Goldman Sachs scarcity warning is the signal that matters most. Price pain is already embedded in the continent’s economies. Physical scarcity of refined products, including diesel, jet fuel and naphtha, would be a different order of disruption entirely, hitting manufacturing, agriculture, aviation and logistics simultaneously. The next 30 days are critical.
Source: Al Jazeera / CNN Business / Fortune / CNBC, May 4-5, 2026
