Oil prices rose more than 4% on Monday, as renewed Israeli strikes on Iran and fresh attacks on Lebanon soured hopes of an imminent end to the wider war.
Brent crude futures were up $4.02, or 4.3% to $97.11 a barrel as of 0914 GMT, while U.S. West Texas Intermediate crude futures were up $3.90, or 4.3%, at $94.44.
Israel said on Monday it struck the Mahshahr petrochemical complex in southwestern Iran, as well as military targets. That was despite U.S. President Donald Trump reportedly telling Israeli Prime Minister Benjamin Netanyahu to refrain from further attacks.
A provincial official told Iran’s semi-official Fars news agency that parts of the plant 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.
Roughly a fifth of the world’s daily supply of oil and liquefied natural gas normally passes through the Strait of Hormuz off Iran.
On Monday, Iran’s ambassador to Moscow was quoted as saying that the strait would be open but under new 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 34% since the start of the conflict just over 100 days ago, while WTI has risen 41%. Brent prices in March hit nearly $120.
On Sunday, Iran fired a salvo of missiles at Israeli targets in retaliation for its strikes on Lebanon.
Even so, U.S. President Donald Trump insisted that an agreement to end the wider war remains well within reach.
Iran has made a ceasefire with Lebanon a condition for a peace deal with Washington. Lebanon and Israel said on June 3 that they had agreed to a ceasefire following negotiations in Washington.
Amid 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 snapped up crude wherever they can find it to substitute the millions of barrels a day of oil now not flowing through the strait. Since the conflict started, the world has lost over a billion barrels of supply.
