Oil prices jumped more than $4 a barrel on Monday after Israel carried out fresh strikes on Iran and Lebanon on Monday, despite an existing ceasefire. The renewed escalation dashed hopes for an end to the broader regional conflict and raised concerns about the resumption of crude shipments through the Strait of Hormuz.
Crude oil price on June 8
Brent crude futures rose $4.45 or 4.9% to $97.61 a barrel while U.S. crude futures were up $4 or 4.5% at $94.60 per barrel.
Israel said on Monday that it had carried out strikes on a petrochemical facility in southwestern Iran, along with attacks on other military targets, despite reports that U.S. President Donald Trump had urged Israeli Prime Minister Benjamin Netanyahu to avoid further military action.
The strike marked the first attack on an energy facility inside Iran since the April 8 ceasefire. According to Israel, targets at the Mahshahr petrochemical complex were hit, while a provincial official told Iran's semi-official Fars news agency that parts of the facility had sustained damage.
The attacks came hours after Trump said fresh exchanges between Israel and Iran would not derail his administration's ongoing peace talks with Tehran. He also asserted that Netanyahu "doesn't call the shots."
Trump has been pressing Israel to halt its operations in Lebanon in an effort to create space for a broader agreement aimed at ending the conflict with Iran. Last week, he reportedly expressed his frustration directly to Netanyahu during a phone conversation after renewed military action threatened to undermine diplomatic efforts.
The broader conflict has largely remained paused since the U.S. and Israel suspended attacks on Iran in early April. However, Tehran has continued to restrict most shipping activity through the Strait of Hormuz.
Against this backdrop of supply disruptions, OPEC+ on Sunday approved its fourth oil output increase in four months. Analysts, however, said the move is unlikely to significantly ease market concerns, as many OPEC+ producers remain unable to meet production targets due to the Hormuz disruption.
Haitong Futures said crude prices could move toward the upper end of their trading range as tighter supply-demand dynamics coincide with rapidly declining global oil inventories.
Analysts added that even if a ceasefire is secured, shipping through the Strait of Hormuz may take months to normalize. Any damage to energy infrastructure could further slow the recovery process.
Last month, Saudi Aramco Chief Executive Officer Amin Nasser cautioned that disruptions in the Strait of Hormuz could postpone stability in global oil markets until 2027. He said prolonged disruptions could affect nearly 100 million barrels of oil supply every week. Saudi Aramco remains the world's largest oil producer.
Morgan Stanley described the oil market as being in "a race against time", warning that the factors which have so far limited a sharper rise in crude prices may begin to fade if the Strait of Hormuz remains closed through June.
The brokerage noted that stronger U.S. crude exports and weaker demand from China have helped absorb part of the supply shock. However, it warned that a prolonged closure of the key shipping route could tighten global supplies once again, particularly if the disruption outlasts the period during which the U.S. and China can offset the impact.
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