Oil prices rose more than 3% on Monday, as renewed Israeli strikes on Iran and attacks on Lebanon reduced hopes of an imminent end to the wider war.
Brent crude futures were up $3.08, or 3.3% to $96.17 a barrel as of 1108 GMT, while U.S. West Texas Intermediate crude futures were up $3.37, or 3.7%, at $93.91.
U.S. President Donald Trump on Monday demanded that Israel and Iran “immediately stop ‘shooting’,” following a flurry of attacks that threatened to wreck U.S.-led efforts to broker a deal to end the war.
Israel hit a petrochemical plant in southwestern Iran that it said was used to produce ballistic missiles, and Iran’s Islamic Revolutionary Guard Corps said the country retaliated with a strike aimed at a similar Israeli facility in the city of Haifa.
The exchange followed Israeli strikes on strongholds of Iran-backed Hezbollah in Beirut over the weekend. Tehran has repeatedly said any deal with Washington to end the conflict must include a halt to Israel’s campaign in Lebanon.
“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.
Roughly a fifth of the world’s daily supply of oil and liquefied natural gas passed through the Strait of Hormuz off Iran before U.S.-Israeli airstrikes at the end of February unleashed the latest escalation of the Middle Eastern conflict.
On Monday, Iran’s ambassador to Moscow was quoted as saying that the Strait would be open but under conditions to be set by Iran and Oman, including a transit fee.
Monday’s gains in oil prices erased Friday’s losses, when prices fell on hopes of a de-escalation in the U.S.-Iran conflict.
Brent has risen 33% since the start of the conflict just over 100 days ago, while WTI has risen 40%. Brent in April hit a peak above $126 a barrel.
In the face of the resulting supply crisis, OPEC+ on Sunday agreed its fourth oil output target increase in four months.
Analysts said the decision would have little impact since most OPEC+ members cannot meet their targets because of the closure of the Strait or, in the case of Russia, Ukrainian drone attacks that have eroded its production capacity.
“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 bought crude wherever they can find it to substitute the oil no longer flowing through the Strait. Since the conflict started, the world has lost over a billion barrels of supply.
