Global oil markets surged on Monday as renewed U.S.-Iran strikes and Israel’s deepening push into Lebanon crushed weekend hopes for a diplomatic breakthrough.
U.S. crude futures climbed $2.29, or 2.62%, to $89.65 a barrel as of 04:36 GMT, while the international benchmark Brent crude rose $2.05, or 2.25%, to settle at $93.17 a barrel.
The gains came in stark contrast to Friday’s mood, when both benchmarks had dipped Brent by 1.8% and WTI by 1.7% on cautious hopes that Washington and Tehran were edging toward a durable peace framework.
Those hopes evaporated quickly.
The Pentagon confirmed on Sunday that U.S. forces conducted what it termed “self-defense strikes” on Iranian radar installations and drone control infrastructure at sites on Goruk and Qeshm Island over the weekend. The operation, officials said, was a direct response to what Washington characterized as “aggressive” provocations from Tehran.
Iran did not stay silent for long. Iran’s elite Islamic Revolutionary Guard Corps announced Monday that its aerospace force had targeted an air base it accused of being used in what it described as a U.S. attack on a telecommunications tower on Sirik Island.
Meanwhile, to the northwest, Israel’s military ordered its ground forces to press deeper into southern Lebanon in its ongoing campaign against Hezbollah, the Tehran-backed militant group.
The move, analysts noted, is particularly significant given that Iran has insisted any broader ceasefire deal must encompass Hezbollah making progress on the Lebanese front directly tied to the fate of the wider U.S.-Iran nuclear negotiation.
The timing of the escalation could hardly be worse for diplomats. Just days earlier, U.S. President Donald Trump had signaled cautious optimism, stating Friday that he would soon decide on a proposed deal to extend a ceasefire with Iran that was first announced in early April. That agreement had been intended to give negotiators breathing room to pursue a permanent resolution to the conflict and address the underlying dispute over Iran’s nuclear program.
The price of Brent crude had earlier dipped to around $96 a barrel on Monday on high hopes after Trump promised a U.S.-Iran peace deal was on the horizon before fresh strikes, and Iran’s stern response unsettled markets once more.
The U.S. has reportedly proposed a “gradual de-escalation” roadmap, under which Hezbollah would first halt attacks on Israel in exchange for Israel refraining from further escalation in Beirut. But with Israeli tanks rolling deeper into Lebanese territory and Iranian missile crews on alert, the architecture of that plan looks increasingly precarious.
Beyond the battlefield, traders are watching the Strait of Hormuz with growing anxiety. Iranian forces have effectively declared the strait “closed” since early March 2026, threatening and carrying out attacks on ships attempting to transit the narrow waterway between Iran and Oman.
The strait, a critical shipping lane that accounted for roughly 20% of global energy supply before the conflict, has become the single most consequential flashpoint in global commodity markets.
Now, a new threat is layered on top. An Axios reporter disclosed Friday that Iran had dropped additional mines in the strait earlier in the week, a provocative act that U.S. Defense Secretary Pete Hegseth had explicitly warned would constitute a violation of the ceasefire.
IG analyst Tony Sycamore warned clients in a research note that mounting concerns about those mines could significantly slow any eventual reopening of the waterway. “Even if an agreement is reached, it won’t deliver a flood of supply,” Sycamore cautioned, a sobering message for energy traders banking on a rapid normalization of flows.
Former Biden administration senior energy advisor Amos Hochstein put it even more bluntly: “No matter what happens, the Iranians will control the Strait of Hormuz for the foreseeable future; it doesn’t even matter what the deal says. Everybody in the region believes that.”
The geopolitical fireworks overshadowed an already troubling picture on the demand side. Economic data out of China over the weekend painted a gloomy portrait of the world’s second-largest economy: factory activity has stalled, exports have contracted, and cost pressures are mounting.
For oil markets, which had long relied on Chinese demand as a stabilizing counterweight to Middle East supply shocks, the data adds another layer of uncertainty.
Goldman Sachs, in a late Sunday note, acknowledged the dual-sided risk facing crude markets. The investment bank said weak oil demand from both China and Europe poses a significant downside threat to its fourth-quarter Brent forecast of $90 a barrel and its WTI forecast of $83. Yet, Goldman added, Middle East supply disruptions could still override those demand concerns and push prices higher, a reflection of just how binary the outlook has become.
What is unfolding is a conflict with few modern precedents in its direct impact on global energy flows. Oil prices have surged roughly 50% since the Iran conflict began, as the fighting has effectively shuttered the Strait of Hormuz and sharply curtailed Middle Eastern oil production.
Coordinated releases of strategic reserves and efforts to facilitate alternative oil supplies have so far failed to contain the rally.
Markets are now hostage to a question that no algorithm or analyst can definitively answer: whether the men in Washington, Tehran, Tel Aviv, and Beirut can find enough common ground to step back from the brink and whether they can do so before the economic damage becomes irreversible.
For now, the oil market has rendered its verdict. Prices are rising, and the risk premium is not going anywhere.
WHAT YOU SHOULD KNOW
The world is paying a steep price for a war it cannot afford to ignore. Military escalation between the U.S. and Iran, compounded by Israel’s deepening push into Lebanon, has sent oil prices surging and left the global energy market walking a tightrope.
At the heart of it all is the Strait of Hormuz: with Iran effectively keeping the world’s most critical oil corridor closed and seeding it with mines, even a peace deal offers no guarantee of quick relief.
Meanwhile, slowing demand from China and Europe means the market has no comfortable cushion to fall back on. Until diplomacy produces something real and durable, expect energy prices to remain volatile, unpredictable, and dangerously exposed to the next headline.
