The April 8 ceasefire between the US and Iran was supposed to settle this, and Monday morning it didn't.
Iranian drones and missiles hit the UAE while the US said it sank six Iranian boats in the Strait of Hormuz. Trump went on Fox News and warned Iran it would be "blown off the face of the earth" if it touched US ships.
The UAE Defense Ministry posted Monday that its missile defense systems were actively intercepting Iranian drones and missiles, with phone alerts pinging residents across Dubai and Abu Dhabi telling them to find shelter.
Earlier in the morning, the ministry said three "loitering munitions" were intercepted over UAE territorial waters, while a fourth missile fell into the sea.
A social media account linked to Iran's Islamic Revolutionary Guard Corps appeared to claim credit for the strikes on Telegram, sharing visuals the account said showed hits on the UAE's Port of Fujairah. Tehran's state media pushed back on the US boat claims, saying none of its ships had been sunk.
Adm. Brad Cooper, who runs US Central Command, told reporters US forces took out six small Iranian boats that were trying to disrupt commercial ships.
Trump warned Iran in a Fox News interview that any country touching US ships protecting commercial vessels in the Strait would be "blown off the face of the earth." The two statements landed within hours of each other.
The Strait of Hormuz normally carries roughly a quarter of the world's seaborne oil, per the IEA, and the UAE sits right on that chokepoint. Anything that threatens the Strait ripples through global oil prices.
Stocks fell on the news while oil rose, and investors are watching whether the ceasefire holds at all, or whether the war is about to get bigger. Even short bouts of headline risk in this region tend to drag energy prices around for days.
The April 8 ceasefire was already shaky, but Monday's attacks are the first time the UAE activated its missile alert system since the truce began. The White House did not immediately respond when asked whether the strikes counted as a violation of the truce.
If the ceasefire fully cracks, oil and US-listed energy stocks tend to be the first to move, while defense names like Lockheed Martin and RTX often catch a bid as well. Airlines, which already pay sky-high fuel costs from the February US-Israel strikes, would feel the pain first.
Trump made clear on Fox News that the US won't sit on its hands if its ships get hit, and the Adm. Cooper boat sinking shows that's not just rhetoric. The two sides are now testing how much they can each push before the truce snaps.
Investors looking through the geopolitical noise should expect more headline-driven swings until the picture clears.
If Monday wasn't a one-off, the next leg of this war just started.