By: Economy Middle East

Global oil markets are facing renewed upward pressure as regional instability deepens across the Middle East. Brent oil prices jumped more than $3 a barrel on Monday, initially spooked by Israel’s launch of renewed strikes on Lebanon a day earlier, but also gaining further steam after sounds of explosions were heard in Iran. The reports of regional conflict have effectively dismantled recent market optimism. Sounds of blasts were heard – in Tehran, Tabriz and Isfahan, local media reported early on Monday, eroding hopes for an imminent end to the wider war and a restart to crude flows through the Strait of Hormuz.

The impact on pricing benchmarks was immediate. 

Brent crude futures rose $3.97 or 4.26 percent to $97.06 a barrel while U.S. crude futures were up $3.83 or 4.23 percent at $94.37 per barrel as of 04:47 GMT. These gains completely reversed the downward trend from the previous trading session. Those gains erased Friday’s losses, when prices fell on hopes of a de-escalation in the U.S.-Iran conflict, which has seen oil prices rise over 50 percent since March.

Complex ceasefire path

The diplomatic path toward a ceasefire remains complex and contentious. Though Iran on Sunday fired a salvo of missiles at Israeli targets in retaliation, U.S. President Donald Trump insisted that an agreement to end the wider war remains well within reach. Reports indicate that the U.S. administration is pushing for restraint from its allies. Trump also reportedly told Israeli Prime Minister Benjamin Netanyahu to refrain from further attacks. “It’s not going to have any impact on the deal,” Trump told the Financial Times. “I call the shots. I call all the shots. He doesn’t call the shots.”

The current situation is heavily influenced by conditions set by regional actors. Iran has made a ceasefire with Lebanon a condition for a peace deal with Washington. This follows a series of military escalations that began earlier this year. Israel invaded Lebanon in March after Iran-backed Hezbollah fired rockets and drones across the border. Lebanon and Israel said on June 3 that they had agreed to a ceasefire following negotiations in Washington. Despite these agreements, sustained peace has remained elusive, as the two countries had previously agreed to a cessation of hostilities in April but violence continued.

Supply crisis and OPEC+ limitations

The broader energy crisis stems from a prolonged standoff affecting global shipping corridors. The wider war has been stalemated since the U.S. and Israel paused their attacks on Iran in early April, with Tehran blocking most shipping through the Strait of Hormuz, the main transit route for one-fifth of the world’s oil. Washington has imposed its own blockade of Iranian ports.

Efforts to increase production have provided little relief to the market. Amid the resulting supply crisis, OPEC+ on Sunday agreed its fourth increase in oil output in four months. Industry experts suggest these policy shifts are largely symbolic. But analysts said the decision would have little impact since most OPEC+ members could not meet their output targets because of the Hormuz closure or, in the case of Russia, infrastructure attacks that have eroded its production capacity.