SINGAPORE: Oil prices continued to rise on Monday, building on Friday’s sharp gains, as escalating military strikes between Israel and Iran raised fresh concerns over a wider regional conflict that could disrupt oil supplies from the Middle East.
Brent crude futures rose by $1.12, or 1.5 per cent, to $75.35 a barrel by 0019 GMT, while US West Texas Intermediate (WTI) crude increased by $1.10, or 1.5 per cent, to $74.08. Earlier in the session, both benchmarks had jumped more than $4. On Friday, they settled 7 per cent higher after surging over 13 per cent intraday — their biggest spike since January.
The renewed exchange of strikes between Iran and Israel over the weekend resulted in civilian casualties and renewed fears that the conflict could spill across the region. Both sides have advised civilians in enemy territory to take precautionary measures.
The escalation has also raised alarms about potential disruptions to the Strait of Hormuz — a strategic waterway through which around 18 to 19 million barrels per day of oil and fuel pass. This accounts for roughly one-fifth of global oil consumption.
“Buying was driven by the ongoing Israel-Iran conflict, with no resolution in sight,” said Toshitaka Tazawa, an analyst at Fujitomi Securities. “But as we saw on Friday, some selling emerged on fears the market may be overreacting.”
Analysts say markets are closely watching for any damage to Iran’s oil infrastructure from Israeli strikes. Concerns about a possible blockade of the Strait of Hormuz could push prices even higher.
Iran, a key member of the Organization of the Petroleum Exporting Countries (OPEC), currently produces around 3.3 million barrels per day (bpd) and exports more than 2 million bpd of crude and fuel. Analysts note that OPEC and its allies, including Russia, hold spare production capacity roughly equal to Iran’s current output, which could help offset any supply shortfall.
On the diplomatic front, former US President Donald Trump said on Sunday he hoped Israel and Iran could eventually reach a ceasefire, though he noted that “sometimes countries have to fight it out first”. He confirmed continued US support for Israel but did not clarify whether he had urged restraint.
German Chancellor Friedrich Merz expressed hope that a Group of Seven (G7) leaders’ meeting in Canada on Sunday would lead to a unified effort to de-escalate tensions.
However, diplomatic efforts appear to have hit a wall. According to a Reuters source, Iran told mediators from Qatar and Oman that it is unwilling to consider any ceasefire talks while Israeli attacks continue.
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