Crude oil prices rallied sharply on Monday, with both Brent and West Texas Intermediate (WTI) crude futures posting strong gains as escalating tensions in the Middle East reignited concerns over global energy supply security.
Market sentiment turned risk-averse after Israel ordered additional troop movements deeper into Lebanon, intensifying its conflict with the Iran-backed Hezbollah militant group despite a ceasefire that was announced more than six weeks ago.
WTI crude oil futures for July 2026 rose 3.08% to US$90.05 per barrel, trading near the day's high of US$90.10. Meanwhile, Brent crude futures for August 2026 advanced 1.53% to US$93.46 per barrel after touching an intraday high of US$93.55.
The latest rise in crude oil prices was triggered by reports that Israel had instructed its military forces to expand operations within Lebanon. The development has heightened fears of a broader regional conflict involving Iran-backed groups, increasing the risk premium across energy markets.
The Israel-Lebanon conflict has become one of the most significant spillovers from the wider Iran war. Hostilities began on 2 March when Hezbollah launched rockets and drones into Israel in support of Iran. Although both sides agreed to a ceasefire in mid-April, intermittent exchanges of fire have continued, keeping geopolitical risks elevated.
Investors remain concerned that any further escalation could threaten energy infrastructure or disrupt supply routes across the Middle East, a region responsible for a substantial share of global oil production.
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Oil prices also received support from growing uncertainty surrounding diplomatic efforts between the United States and Iran. Expectations that both countries could soon announce an extension of their ceasefire agreement weakened following the latest military developments in Lebanon.
On Friday, US President Donald Trump stated that a decision on a proposed extension of the ceasefire with Iran would be made soon. The extension would provide negotiators with additional time to pursue a long-term resolution to the conflict and address disputes related to Iran’s nuclear programme.
However, analysts believe the deteriorating security situation could complicate negotiations. Israel is expected to play a crucial role in any future agreement, while Iran has repeatedly maintained that Hezbollah's interests must also be considered in any broader settlement.
The renewed geopolitical tensions pushed crude oil prices back towards multi-month highs after both benchmark contracts had recorded losses during the previous session.
US crude futures had settled 1.7% lower on Friday, while Brent crude futures declined 1.8%, following optimism that diplomatic progress could reduce supply risks. However, the latest developments have shifted market focus back towards potential disruptions and geopolitical uncertainty.
WTI crude remains within its 52-week range of US$54.98 to US$117.63 per barrel, while Brent crude continues to trade within its annual range of US$58.72 to US$126.41.
Crude oil markets are once again being driven by geopolitical developments in the Middle East. Escalating military activity between Israel and Hezbollah, coupled with uncertainty surrounding US-Iran ceasefire negotiations, has increased concerns about future supply stability. Unless diplomatic progress improves significantly, oil prices may remain volatile as traders continue to factor geopolitical risk into energy markets.
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Published on: Jun 1, 2026, 8:50 AM IST
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