Oil prices climbed further on Monday as global markets reacted to renewed uncertainty over the Iran conflict, following attacks near critical energy infrastructure in the Gulf and growing speculation that the United States may consider military escalation.
Brent crude futures rose by $2.01, or 1.84%, to $111.27 per barrel in early trading, briefly touching $112 earlier in the session, the highest level since 5 May. US West Texas Intermediate crude gained $2.33, or 2.21%, reaching $107.75 per barrel after earlier peaking at $108.70, its strongest level since late April. The June contract is set to expire on Tuesday, adding further volatility to trading conditions.
Both benchmarks had already surged more than 7% last week as hopes faded for a diplomatic breakthrough to ease tensions surrounding the Strait of Hormuz, a vital global shipping route through which nearly a fifth of the world’s oil and liquefied natural gas passes.
Efforts to stabilise the situation suffered another setback after recent talks between US President Donald Trump and Chinese President Xi Jinping ended without progress on easing the conflict or securing Chinese support as the world’s largest oil importer.
The latest price rally was also driven by concerns over drone attacks in the region, including incidents near facilities in the United Arab Emirates and Saudi Arabia. Emirati officials confirmed they were investigating a strike near the Barakah nuclear power plant and said the country reserved the right to respond to what it described as “terrorist attacks.”
Saudi Arabia said it intercepted three drones that entered its airspace from Iraq, warning it would take operational measures to protect its sovereignty and critical infrastructure.
Market analysts said the growing risk of escalation was keeping oil markets on edge. Tony Sycamore of IG noted that renewed strikes on Iran could trigger further retaliatory attacks through regional proxies, increasing pressure on Gulf energy infrastructure.
Attention is also focused on Washington, where Trump is expected to meet senior national security advisers to discuss possible military options regarding Iran, according to Axios reports. The prospect of further escalation has intensified fears of supply disruptions at a time when global energy markets are already under strain.
Adding to market pressure, the US administration allowed a sanctions waiver on Russian seaborne oil exports to lapse over the weekend after a temporary extension. The move could tighten global supply further, particularly for countries such as India that had previously benefited from the waiver.
Analysts say the combination of geopolitical risk and tightening supply conditions has created a fragile environment for energy markets. Vandana Hari of Vanda Insights said fears of renewed strikes in the Middle East were already pushing prices higher, while the end of the Russian oil waiver had added another layer of uncertainty.
