Oil prices surge more than $3 as Israeli strikes on Lebanon spark fresh fears

WEB DESK: Brent crude climbed sharply on Monday amid escalating tensions in the Middle East, with Israeli strikes on Lebanon and reported explosions in Iranian cities eroding hopes of an imminent resolution to the wider conflict.

The renewed violence has disrupted expectations of stabilised energy supplies, sending shockwaves through global markets already strained by disruptions in key shipping routes.

Market reaction

Brent oil futures rose by $3.20, or 3.39 pc, to $96.24 a barrel in early Asian trading, while US West Texas Intermediate crude gained $2.87, or 3.17 pc, to $93.41 per barrel. The gains reversed losses from Friday, when prices had dipped on optimism over potential de-escalation between the US and Iran.

The surge comes as the broader conflict has driven oil prices up by more than 50 pc since March. Tehran’s continued blockage of the Strait of Hormuz a critical chokepoint carrying one-fifth of global oil shipments has created a persistent supply crunch, despite efforts by major producers to ease tensions.

Geopolitical tensions persist

The latest flare-up follows Israel’s renewed strikes on Lebanon and reports of explosions in Tehran, Tabriz, and Isfahan early on Monday, according to local media.

Iran had fired missiles at Israeli targets on Sunday in retaliation, further dimming prospects for a swift ceasefire.

US President Donald Trump, however, expressed confidence that a deal to end the conflict remains within reach.

He reportedly urged Israeli Prime Minister Benjamin Netanyahu to hold back from further attacks, stating in an interview with the Financial Times that he was firmly in control of the situation.

Iran has insisted on a ceasefire with Lebanon as a precondition for any peace agreement with Washington. The two sides had announced a truce on June 3 after earlier negotiations, but violence has persisted despite previous attempts at de-escalation.

In response to the supply crisis, OPEC+ agreed on Sunday to its fourth output increase in four months. Analysts, however, warned that the move would have limited effect, as many members are unable to meet their targets due to the Hormuz blockade and infrastructure challenges, including attacks affecting Russian production capacity.