Oil prices climb more than $4 after Israeli strikes on Iran and Lebanon

Oil prices surged more than 4% on Monday after renewed Israeli strikes on Iran and fresh attacks on Lebanon dampened expectations of a near-term end to the wider conflict.

Brent crude futures rose $4.02, or 4.3%, to $97.11 a barrel by 0914 GMT, while US West Texas Intermediate (WTI) crude gained $3.90, or 4.3%, to $94.44.

Israel said it had targeted the Mahshahr petrochemical complex in southwestern Iran, along with military sites, despite reports that US President Donald Trump had urged Israeli Prime Minister Benjamin Netanyahu to avoid further attacks. An Iranian provincial official told the semi-official Fars news agency that parts of the facility were damaged.

“With Iran and Israel exchanging fire, the market is concerned that flows through the strait might remain restricted for longer, lifting oil prices,” UBS analyst Giovanni Staunovo said.

About one-fifth of the world’s daily oil and liquefied natural gas supply typically passes through the Strait of Hormuz. Iran’s ambassador to Moscow said on Monday that the waterway would remain open, but under new conditions to be set by Iran and Oman, including a transit fee.

The latest rally reversed Friday’s losses, when oil prices fell on hopes of a de-escalation in the US-Iran conflict. Since the conflict began more than 100 days ago, Brent crude has climbed 34% and WTI 41%, with Brent reaching nearly $120 in March.

On Sunday, Iran launched missiles at Israeli targets in response to Israeli strikes on Lebanon. However, Trump maintained that a deal to end the wider war remained achievable.

Iran has linked a peace agreement with Washington to a ceasefire in Lebanon. Lebanon and Israel announced on June 3 that they had agreed to a ceasefire after negotiations in Washington.

Amid concerns over disrupted supplies, OPEC+ on Sunday approved its fourth oil output target increase in four months. Analysts said the move would have limited impact because many members are unable to meet production targets due to restrictions in the Strait of Hormuz and, in Russia’s case, Ukrainian drone attacks on production infrastructure.

“In the current market, the physical impact of such a decision would be close to zero,” Jorge Leon, Rystad Energy’s head of geopolitical analysis, said in a note to clients.

Refiners have been sourcing crude from alternative suppliers to offset the millions of barrels per day no longer moving through the strait. Since the conflict began, global oil supply losses have exceeded one billion barrels.