Oil prices climbed sharply Monday as renewed fighting involving the United States, Iran and Israel heightened concerns about potential disruptions to global energy supplies.
Benchmark Brent crude rose more than 3% to about $94 a barrel, while U.S. crude increased nearly 4% to more than $90 a barrel. The gains came despite a difficult month for oil markets, with both benchmarks having fallen sharply during May.
The latest increase followed reports that U.S. forces carried out what officials described as self-defense strikes against Iranian-linked targets. Iran responded by launching strikes against a military air base it said had been used in U.S. operations.
At the same time, Israel ordered troops to advance further into Lebanon as fighting with the Iran-backed Hezbollah militia continued. The renewed violence dampened hopes that a ceasefire between the United States and Iran, first announced in April, could soon be extended.
President Donald Trump said Friday that he would soon decide whether to support a proposed extension of the ceasefire. U.S. officials are also pursuing a gradual de-escalation plan involving Israel and Lebanon.
Energy markets are increasingly focused on the Strait of Hormuz, a narrow waterway through which a significant share of the world’s oil and natural gas shipments pass. Reports that Iran may have increased the number of naval mines in the area have heightened fears that shipping traffic could be disrupted.
Any threat to oil supplies moving through the strait can quickly drive prices higher because the route is one of the world’s most important energy corridors.
The rise in oil prices came despite signs of slowing economic growth in China, the world’s second-largest economy, and concerns about weak energy demand in both China and Europe.
Analysts at Goldman Sachs warned that sluggish demand could weigh on oil prices later this year. However, they noted that any significant supply disruption in the Middle East could still push prices substantially higher.
For now, traders appear more focused on the risk of escalating conflict than on concerns about global demand, sending oil prices sharply upward as tensions in the region continue.
Source: Reuters
The price of oil will be falling soon. We cannot allow Iran to have a nuclear weapon. Let’s hope the Persians will be able to get religious thugs out of power and establish a democracy.