Global oil prices climbed more than 3 percent on Monday as renewed military exchanges between the United States and Iran, along with Israel’s expanded operations in Lebanon, heightened fears of supply disruptions from one of the world’s most critical energy-producing regions.
U.S. crude futures rose US$2.88, or 3.3 percent, to US$90.24 a barrel as of 0701 GMT, while Brent crude gained US$2.78, or 3.05 percent, to US$93.90 a barrel.
The rally comes after a weekend marked by escalating geopolitical tensions, including reported strikes between U.S. and Iranian forces and Israeli troop movements deeper into Lebanon in its ongoing confrontation with Iran-backed Hezbollah.
The United States said it conducted “self-defence strikes” on radar and drone control sites in Iran’s Goruk and Qeshm Island, describing the action as a response to what it called “aggressive” Iranian activity.
Iran’s Islamic Revolutionary Guard Corps said it had retaliated by targeting a military air base linked to U.S. operations, further deepening concerns that the conflict could widen across the region.
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Analysts say the intensifying confrontation has significantly raised the risk premium in global oil markets, particularly as attention turns to the Strait of Hormuz, a vital shipping corridor through which about one-fifth of global oil and gas flows.
Concerns over potential disruptions in the waterway have been compounded by reports of mine-laying activity in the area, which traders fear could slow or restrict tanker movement even if a ceasefire agreement is reached.
Energy analysts warn that any sustained disruption in the Strait could have immediate and severe implications for global supply chains, given the limited alternative export routes for Gulf producers.
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The market reaction also reflects uncertainty around diplomatic efforts. U.S. officials have proposed a “gradual de-escalation” framework involving Israel and Lebanon, under which Hezbollah would reduce attacks in exchange for Israeli restraint. However, the prospects for a broader regional agreement remain unclear.
The price surge follows a brief dip on Friday, when hopes of a ceasefire extension between Washington and Tehran had eased market concerns and pushed oil prices lower.
However, those expectations faded over the weekend as hostilities resumed, reversing sentiment in global energy markets.
Despite the sharp increase in prices, analysts caution that demand-side risks remain a key counterweight.
Investment bank Goldman Sachs warned that weaker-than-expected oil demand in China and Europe could limit further gains, even as geopolitical risks support prices in the short term.
Data from China over the weekend showed slowing manufacturing activity, raising concerns that the world’s second-largest economy is losing momentum amid export weakness and persistent cost pressures.
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Goldman Sachs said weaker demand could pose a downside risk to its oil price forecasts for the fourth quarter, even though ongoing Middle East tensions could still push prices higher in the near term.
The bank currently projects Brent crude could average around $90 a barrel and West Texas Intermediate around $83, though it noted that supply disruptions would likely override demand weakness if the conflict escalates further.
The latest price movement underscores how quickly geopolitical shocks can override macroeconomic signals in global energy markets.
For now, traders are closely watching developments in the Middle East, particularly any escalation involving Iran, Israel and U.S. forces, as well as the security of key maritime routes that underpin global energy trade.
