Oil prices climbed more than 2 percent on Monday as renewed military exchanges between the United States and Iran, coupled with intensifying conflict involving Israel and Hezbollah, raised fears of supply disruptions in the Middle East.
US crude futures rose by $2.29, or 2.62 percent, to $89.65 a barrel by 07:36 a.m. Saudi time. Brent crude futures gained $2.05, or 2.25 percent, to reach $93.17 a barrel.
The gains followed a sharp escalation in regional tensions after Iran and the United States exchanged strikes and Israel ordered troops to push deeper into Lebanon in operations against the Iran-backed Hezbollah movement.
The latest fighting has weakened expectations that Washington and Tehran may soon agree to extend their fragile ceasefire arrangement. Those hopes had weighed on prices at the end of last week, with Brent and West Texas Intermediate settling down 1.8 percent and 1.7 percent respectively on Friday.
The US military said on Sunday it carried out what it described as “self-defence strikes” targeting Iranian radar and drone control facilities in Goruk and on Qeshm Island. Washington said the action responded to what it called aggressive moves by Tehran.
Iran responded through its Islamic Revolutionary Guard Corps, which said on Monday that its aerospace division targeted an air base allegedly used in a US strike on a telecommunications tower on Sirik Island.
US President Donald Trump said on Friday that he would soon decide whether to support a proposed extension of the ceasefire first announced in April. The proposal is intended to provide negotiators with additional time to pursue a broader agreement aimed at resolving the conflict and addressing disputes surrounding Iran’s nuclear programme.
Israel and Hezbollah remain central to those discussions. A US official said Washington had suggested a gradual de-escalation framework in which Hezbollah would halt attacks on Israel while Israel would refrain from escalating military activity in Beirut.
Energy markets are also closely watching developments around the Strait of Hormuz, a crucial shipping route carrying roughly one-fifth of global oil and gas supplies. Iran has effectively restricted passage through the waterway since fighting began following US and Israeli strikes earlier this year.
Analysts warn that concerns over naval mines in the strait could delay any reopening and prolong market uncertainty.
“Even if an agreement is reached, it won’t deliver a flood of supply,” IG analyst Tony Sycamore said in a market note.
Reports also suggested Iran had laid additional mines in the strait earlier this week, raising concerns despite ceasefire commitments.
Supply fears overshadowed weak economic data from China showing slowing factory activity and mounting pressure on exports. Analysts at Goldman Sachs said weak demand from China and Europe could weigh on oil prices later this year, though continued Middle East disruptions still carry the potential to drive prices higher.
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