Oil prices climbed more than 2 percent on Monday as fresh military exchanges between Iran and the United States, along with escalating tensions between Israel and Hezbollah, renewed concerns about energy supplies from the Middle East.
Brent crude rose by $2.05, or 2.25 percent, to $93.17 a barrel, while US West Texas Intermediate (WTI) crude gained $2.29, or 2.62 percent, reaching $89.65 a barrel in early trading.
The market reacted sharply after both Washington and Tehran carried out strikes over the weekend. The developments came at a time when investors had been hoping for progress on efforts to extend a ceasefire between the two countries.
Those expectations had helped push oil prices lower at the end of last week. However, the latest military action has raised doubts about whether negotiations can move forward smoothly.
The United States said it carried out what it described as self-defence strikes against Iranian radar and drone control facilities in Goruk and on Qeshm Island. According to Washington, the operation was a response to what it called aggressive actions by Tehran.
Iran responded by saying its Revolutionary Guard’s aerospace force targeted an air base allegedly linked to a US attack on a telecommunications facility on Sirik Island.
The situation has become more complicated as fighting between Israel and Hezbollah intensifies. Israel has reportedly ordered troops to advance further into Lebanon, increasing concerns that the conflict could spread across the region.
US President Donald Trump said on Friday that he would soon decide whether to approve a proposal extending the ceasefire with Iran that was first announced in April. The extension is intended to give negotiators more time to seek a long-term agreement, including discussions surrounding Iran’s nuclear programme.
Diplomatic efforts are also focusing on reducing tensions between Israel and Hezbollah. Reports suggest the United States has proposed a gradual de-escalation plan under which Hezbollah would halt attacks on Israel while Israel would avoid further military escalation in Beirut.
Beyond the fighting itself, traders remain focused on the Strait of Hormuz, one of the world’s most important energy shipping routes. Roughly one-fifth of global oil and gas supplies pass through the narrow waterway.
Market analysts warn that concerns over mines in the strait continue to create uncertainty. Any delay in fully reopening the route could slow the return of normal oil flows and keep pressure on prices.
Tony Sycamore, an analyst at IG, said even if a political agreement is reached, the market should not expect a rapid increase in supply. He noted that disruptions in the region could continue to affect energy markets for some time.
Reports also suggested that Iran may have deployed additional mines in the Strait of Hormuz earlier this month, despite warnings from US officials that such actions would violate the ceasefire.
Supply concerns largely overshadowed weaker economic data from China, which showed factory activity struggling to gain momentum. The figures reinforced worries about slowing growth in the world’s second-largest economy, with exports under pressure and businesses facing rising costs.
Meanwhile, Goldman Sachs warned that softer demand from China and Europe could pose a significant risk to oil prices later this year. The bank said weaker consumption could weigh on its forecasts, although any further disruption to Middle Eastern supplies could still drive prices higher.
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