Oil prices rallied sharply on Monday, climbing more than $4 a barrel as renewed military action involving Israel, Iran and Lebanon heightened fears over energy supply disruptions and cast doubt on hopes for a near-term resolution to the conflict.
Brent crude futures advanced $4.42, or 4.47%, to $97.15 a barrel by 0609 GMT, while U.S. West Texas Intermediate crude gained $4.07, or 4.50%, to trade at $94.61 a barrel.
Israeli attacks target Iranian energy infrastructure
Market sentiment was shaken after Israel confirmed strikes on military targets in Iran, including an attack on a petrochemical facility in the country’s southwest. The operation came despite reports that U.S. President Donald Trump had urged Israeli Prime Minister Benjamin Netanyahu to avoid further military escalation.
In the first reported strike on Iranian energy infrastructure since the ceasefire agreed on April 8, Israel said it had targeted facilities at the Mahshahr petrochemical complex. Iranian officials later confirmed that parts of the site had sustained damage.
The latest developments have weakened expectations for a swift end to the broader conflict and reduced optimism that crude shipments through the Strait of Hormuz could resume in the near future. Before the conflict, the strategic waterway handled roughly one-fifth of global oil and liquefied natural gas trade.
Oil erases Friday’s losses as geopolitical risks return
Monday’s rally reversed the losses recorded at the end of last week, when crude prices declined on hopes that tensions between the United States and Iran could ease.
Despite recent volatility, oil prices have risen by nearly 60% since the conflict began in late February. However, prices remain below the highs reached in March, when Brent crude briefly approached $120 a barrel.
On Sunday, Iran launched a new wave of missile attacks against Israeli targets in response to Israeli operations in Lebanon. Even so, President Trump maintained that a broader peace agreement remains achievable.
Iran has repeatedly linked any wider peace settlement with Washington to the implementation of a ceasefire in Lebanon.
Israel launched military operations in Lebanon in March after Iran-backed Hezbollah forces carried out rocket and drone attacks across the border. On June 3, Israel and Lebanon announced that they had agreed to a ceasefire following talks held in Washington.
Iran proposes new conditions for Strait of Hormuz access
Adding to market uncertainty, Iran’s ambassador to Russia indicated that the Strait of Hormuz could reopen, but under revised operating conditions.
“Of course, this strait will be open, but with new conditions to be determined by the Iranian and Omani authorities,” Ambassador Kazem Jalali told the Russian newspaper Izvestia in an interview published on Monday.
According to Tehran, most shipping traffic through the Strait of Hormuz remains restricted, while the United States continues to enforce its own measures against Iranian ports.
OPEC+ output increase seen as having limited impact
Against the backdrop of ongoing supply disruptions, OPEC+ agreed on Sunday to raise oil production for the fourth time in four months.
However, analysts argued that the decision is unlikely to significantly alter market conditions because several producers are struggling to reach their output targets. The closure of the Strait of Hormuz continues to constrain exports, while Russia’s production capacity has been affected by attacks on energy infrastructure.
“In the current market, the physical impact of such a decision would be close to zero,” Rystad Energy’s head of geopolitical analysis, Jorge Leon, said in a note to clients.
With geopolitical tensions escalating and key supply routes still disrupted, energy traders remain focused on the risk of further volatility across global oil markets.