Oil prices climbed more than 3% on Monday after renewed military exchanges between the United States and Iran, alongside Israel’s decision to deepen its military operations in Lebanon, heightened concerns over global energy supplies.
Brent crude rose to $93.90 per barrel while U.S. West Texas Intermediate (WTI) gained to $90.24, reversing losses recorded at the end of last week when markets had been optimistic about a possible extension of a U.S.-Iran ceasefire.
The latest escalation followed U.S. strikes on radar and drone-control facilities in Iran over the weekend, which Washington described as defensive actions. Tehran responded by targeting a military air base it linked to the U.S. operation.
The developments cast doubt on ongoing diplomatic efforts aimed at extending the ceasefire announced in April and negotiating a broader settlement over Iran’s nuclear programme and regional security issues.
Israel’s military advance into Lebanon further complicated negotiations, with Iran insisting that Hezbollah be included in any future agreement involving regional de-escalation.
Market participants also remain concerned about security in the Strait of Hormuz, a critical shipping route that carries roughly one-fifth of global oil and gas supplies.
Analysts warned that reports of additional Iranian mines in the waterway could delay any reopening of the strait, prolonging supply risks and keeping crude prices elevated.
The supply concerns outweighed weaker economic data from China, where factory activity showed signs of stagnation amid slowing exports and persistent cost pressures.
Meanwhile, Goldman Sachs said weak demand in China and Europe poses a downside risk to its oil price forecasts, although any further disruption to Middle East supplies could drive prices higher.
Investors are closely monitoring geopolitical developments, with energy markets remaining highly sensitive to signs of either escalation or progress in regional ceasefire negotiation