Tensions in the Gulf surged Tuesday as Washington and Tehran exchanged fire, pushing the US‑Iran ceasefire to the brink. Washington accused Tehran of launching cruise missiles at American warships and merchant vessels, while President Trump claimed U.S. forces shot down Iranian small boats. The United Arab Emirates reported intercepting Iranian missiles, a drone strike ignited a petrochemical plant in Fujairah, raising concerns across the region.

The skirmish rattled markets, slicing oil prices after a 5.8% jump the day before. Brent settled at $113.22 a barrel, down 1.1%, while overall oil price momentum stalled amid growing supply concerns. Asian equities felt the strain; Hong Kong’s Hang Seng slipped 0.9% and Taiwan’s Taiex edged lower after touching record highs. European futures retreated modestly.

Beyond energy, the flare‑up underscores geopolitical risk for investors tracking Middle East exposure. German Chancellor Friedrich Merz, who has courted President Trump, warned that Iran’s actions are “humiliating” the United States, a comment that could reverberate through European defence spending. With oil volatility and diplomatic strain converging, traders are likely to price in heightened uncertainty for the coming weeks globally.