Oil prices surged more than 2% in early trading on Monday, driven by escalating tensions after Israel ordered additional troop deployments into southern Lebanon. This move heightened concerns over the stability of the ceasefire with the Iran-backed Hezbollah group, which had been announced over six weeks ago.
Price Movements
US crude futures (WTI) climbed by 2.71% to $89.73 per barrel, while Brent crude futures gained 2.37% to $93.28 per barrel, according to Reuters. The sharp increase came as renewed fighting raised fears that efforts to extend the ceasefire between the United States and Iran could face new complications. This development dampened hopes for a broader easing of regional tensions, which had previously helped push oil prices lower at the end of last week.
Background of the Conflict
The latest escalation follows peace talks hosted by the United States between Israeli and Lebanese representatives in Washington on Friday. However, Israel's decision to intensify military operations in Lebanon has increased uncertainty over the future of the ceasefire and wider regional stability. The Israel-Hezbollah conflict has emerged as the most significant spillover of the ongoing Iran war. Hostilities began on March 2 when Hezbollah launched rockets and drones into Israel in support of Iran. Although both sides agreed to a ceasefire in mid-April, sporadic exchanges of fire have continued.
US-Iran Ceasefire Discussions
US President Donald Trump stated on Friday that a decision on extending the ceasefire agreement with Iran would be made soon, giving negotiators additional time to pursue a permanent settlement and address disputes surrounding Tehran's nuclear program. Any long-term agreement is expected to involve Israel, while Iran has repeatedly insisted that Hezbollah must also be part of any broader arrangement.
Strait of Hormuz Concerns
Meanwhile, concerns over global energy supplies have intensified due to reports of mines being laid in the Strait of Hormuz, one of the world's most critical oil and gas shipping routes. According to market analysts, the possibility of further disruptions in the strait could slow efforts to fully restore shipping traffic, limiting the pace at which additional oil supplies return to global markets. The Strait of Hormuz remains a strategic waterway, carrying roughly one-fifth of global oil and gas flows. Iran has effectively restricted access to the strategic waterway since the conflict began, following US and Israeli strikes in February.
