Key facts
- Oil prices increased by more than $2 a barrel on Monday.
- The rise followed renewed Israeli strikes on Lebanon on Sunday.
- U.S. crude futures were up $2.10 at $92.64 per barrel.
- Brent crude futures rose $2.33 to $95.42 per barrel.
- The strikes present a barrier to a U.S.-Iran peace deal and reopening of the Strait of Hormuz.
- OPEC+ agreed to its fourth oil output increase in four months, but analysts expect little impact due to supply constraints.
Oil prices climbed more than $2 a barrel on Monday following renewed Israeli strikes on Lebanon, dampening hopes for an end to the wider conflict and a potential resumption of crude flows through the Strait of Hormuz. U.S. crude futures rose $2.10, or 2.32%, to $92.64 per barrel, while Brent crude futures gained $2.33, or 2.5%, to $95.42 a barrel as of 0013 GMT. These gains reversed most of Friday's losses, which occurred amid increasing expectations of deescalation in the U.S.-Iran conflict.
The recent strikes complicate prospects for a U.S.-Iran peace deal and the reopening of the Strait of Hormuz, a critical artery for global oil and gas transport. Iran has stipulated a ceasefire with Lebanon as a prerequisite for a peace agreement with Washington. In response to the Beirut strikes on its ally Hezbollah, Iran launched missiles toward Israel. U.S. President Donald Trump indicated he would advise Israeli Prime Minister Benjamin Netanyahu against retaliating against Iran.
Israel had previously invaded Lebanon in March after Iran-backed Hezbollah launched rockets and drones across the border. A ceasefire between Lebanon and Israel was announced on June 3 following negotiations in Washington, though violence had persisted after a prior cessation of hostilities agreement in April. The broader conflict had been on hold since early April when the U.S. and Israel ceased attacks on Iran, but Iran continued to impede shipping through the Strait of Hormuz.
Amid the ongoing supply crisis, OPEC+ announced its fourth oil output increase in four months on Sunday. However, analysts suggest this decision will have minimal impact, as most OPEC+ members are unable to meet their production targets due to the closure of the Strait of Hormuz or reduced capacity from infrastructure attacks, as seen in Russia. Jorge Leon, head of geopolitical analysis at Rystad Energy, noted that the physical impact of such a decision would be negligible in the current market.