Oil prices have surged more than $4 on Monday, with investors spooked by fresh Israeli strikes on Iran and renewed attacks on Lebanon a day earlier. The Brent crude futures LCOc1 rose $4.42 or 4.47% to $97.15 a barrel as of 0609 GMT, while U.S. crude futures were up $4.07 or 4.50% at $94.61 per barrel.
Israel said on Monday it hit a petrochemical plant in Iran's southwest, along with strikes elsewhere on military targets. This is despite U.S. President Donald Trump reportedly telling Israeli Prime Minister Benjamin Netanyahu to refrain from further attacks.
The first hit on an energy site inside Iran since the April 8 ceasefire, Israel said it struck targets at the Mahshahr petrochemical complex. A provincial official told Iran's semi-official Fars news agency parts of the plant were damaged.
Hopes are now eroding for an imminent end to the wider war and a restart to crude flows through the Strait of Hormuz, through which roughly a fifth of the world’s oil and liquefied natural gas used to transit.
Monday's gains erased Friday's losses, when prices fell on hopes of a de-escalation in the U.S.-Iran conflict. Oil prices have climbed just under 60% since the start of the war in late February but remain below highs marked in March when Brent reached nearly $120 per barrel.
On Sunday, Iran fired a salvo of missiles at Israeli targets in retaliation for the strikes on Lebanon. Despite this, U.S. President Donald Trump insisted that an agreement to end the wider war remains well within reach.
Iran has made a ceasefire with Lebanon a condition for a peace deal with Washington.
The Strait of Hormuz will be open but under new conditions to be set by Iran and Oman, including a transit fee, according to Iran's ambassador to Moscow. This development adds to the uncertainty surrounding global oil supply.
OPEC+ on Sunday agreed its fourth increase in oil output in four months, but analysts say this decision may have little impact due to ongoing production issues.
The recent escalation in Middle East tensions has led to increased uncertainty and volatility in the global energy market.
