Crude oil prices jumped over 3% on Monday as the Middle East conflict escalated after Israel launched renewed strikes on Lebanon despite a truce between the two countries, eroding hopes for an end to the wider US-Iran war and a restart to crude flows through the Strait of Hormuz.
US crude futures rallied 4.26% to $94.40 per barrel, while Brent crude oil futures gained 3.82% to $96.65 a barrel.
Market sentiment weakened after Israel’s latest strikes on Lebanon reduced expectations of a US-Iran agreement and the reopening of the Strait of Hormuz, a key global oil transit route. Iran had reportedly linked a ceasefire in Lebanon to progress in its diplomatic engagement with Washington.
Iran also retaliated with missile strikes at Israel, in response to the attack in Beirut targeting its ally Hezbollah. Meanwhile, US President Donald Trump said he would urge Israeli Prime Minister Benjamin Netanyahu to refrain from retaliatory action against Iran, Reuters reported.
Israel and Lebanon had agreed to a ceasefire on June 3 following negotiations in Washington. However, hostilities have continued despite the truce.
The US and Israel had suspended attacks on Iran in early April, but Tehran has continued to restrict a significant portion of shipping activity through the Strait of Hormuz.
Meanwhile, OPEC agreed to another increase to their oil output quotas for July of 188,000 barrels a day.
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