BEIJING (Reuters) – Oil prices rose more than 3% on Monday after Iran and the U.S. traded strikes and Israel ordered troops to move further into Lebanon in its battle with Tehran-backed Hezbollah.
U.S. crude futures rose $2.88 or 3.3% to $90.24 a barrel as of 0701 GMT. Brent futures rose $2.78 or 3.05% to $93.9 a barrel.
The fighting, after Washington hosted Israel-Lebanon peace talks on Friday, dimmed hopes that the U.S. and Iran could soon announce an extension to their ceasefire, which had driven Brent and WTI to settle down 1.8% and 1.7%, respectively, on Friday.
The U.S. said on Sunday it conducted “self-defence strikes” on radar and drone control sites in Iran’s Goruk and Qeshm Island over the weekend in what it said was a response to “aggressive” actions by Tehran.
Iran’s elite Islamic Revolutionary Guard Corps said on Monday its aerospace force targeted an air base used in what it called a U.S. attack on a telecoms tower on Sirik Island.
U.S. President Donald Trump said on Friday he would soon decide on a proposed deal to extend a ceasefire announced in early April, giving negotiators more time to seek a permanent end to the war and find a solution to the underlying dispute over Iran’s nuclear programme.
Israel would be key to any such deal, and Iran has said repeatedly that Hezbollah must be included. The U.S. has proposed a “gradual de-escalation” plan under which Hezbollah would first stop attacks on Israel in exchange for Israel refraining from escalation in Beirut, a U.S. official said on Sunday.
Concerns are rising about mines in the Strait of Hormuz, a key oil and gas shipping lane, IG analyst Tony Sycamore said in a note. That could slow the process of reopening the waterway 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,” Sycamore said.
An Axios reporter said on X on Friday that Iran had dropped more mines in the strait earlier in the week, shortly after U.S. Defense Secretary Pete Hegseth said that attempts to lay more mines would be a violation of the ceasefire.
The Strait is a conduit for about a fifth of global oil and gas flows and Iran has effectively closed it since the conflict began with U.S. and Israeli strikes on February 28.
