Oil prices rose more than 2% in early trading on Monday after Israel ordered troops to move further into Lebanon in the battle with the Iranian-backed Hezbollah militant group. U.S. crude futures rose $2.17 or 2.48% to $89.53 a barrel as of 1112 GMT. Brent futures rose $1.93 or 2.12% to $93.05 a barrel.
Geopolitical Tensions
The stepped-up fighting, coming just after the U.S. hosted Israeli-Lebanon peace talks in Washington on Friday, dimmed expectations that the U.S. and Iran could soon announce an extension to their ceasefire agreement. The Israel-Lebanon conflict has been the broadest spillover of the Iran war, which started on March 2 when Hezbollah began firing rockets and drones across the border into Israel.
Supply Concerns
Concerns are rising about mines in the key oil and gas shipping lane, the Strait of Hormuz. This could slow the process of reopening the strait and mean that relief comes more slowly for the oil market even after it is reopened. "Even if an agreement is reached, it won't deliver a flood of supply," said IG analyst Tony Sycamore.
Demand Side Factors
Concerns over supply outweighed lacklustre economic data from China over the weekend, which showed stalling factory activity. This added to concerns the world's second-largest economy is losing momentum, weighed down by a contraction in exports and cost pressures.
Price Outlook
The market will be closely watching upcoming data releases and geopolitical developments. Any announcements regarding the ceasefire extension or changes in the Strait of Hormuz situation could significantly impact prices.
| Commodity | Contract Month | Price ($/barrel) | WoW Change (%) | YoY Change (%) |
|---|---|---|---|---|
| U.S. Crude Futures | June 2026 | 89.53 | +2.48 | N/A |
| Brent Futures | June 2026 | 93.05 | +2.12 | N/A |
