Oil jumps 2.5% as Israel intensifies attacks on Lebanon
What's the story
Oil prices surged over 2% in early trading on Monday, after Israel ordered its troops to advance further into Lebanon. The move has raised fears that clashes with the Iran-backed Hezbollah group could jeopardize a fragile ceasefire between Washington and Tehran. US crude futures rose $2.17 or 2.48% to $89.53 per barrel, while Brent futures rose $1.93 or 2.12% to $93.05 a barrel on Monday morning.
Ceasefire concerns
US hosted Israeli-Lebanon peace talks on Friday
The escalation in hostilities comes just after the US hosted Israeli-Lebanon peace talks in Washington on Friday. This has dimmed hopes of a possible extension to their ceasefire agreement. The Israel-Lebanon conflict, which began on March 2 when Hezbollah started launching rockets and drones into Israel, is the biggest spillover of the Iran war. A ceasefire was reached in mid-April but hostilities have continued since then.
Presidential deliberation
Trump to decide on proposed Iran ceasefire extension deal soon
US President Donald Trump has said he will soon decide on a proposed deal to extend the ceasefire with Iran. The deal was announced in early April and aims to give negotiators more time for a permanent resolution to the conflict and address concerns over Iran's nuclear program. However, Israel's role is crucial in any such deal, with Iran insisting that Hezbollah must also be included.
Shipping lane risks
Concerns grow over mines in the Strait of Hormuz
Concerns are also growing over mines in the Strait of Hormuz, a key oil and gas shipping lane. The fears could delay the reopening process of the strait and slow relief for the oil market even after it is reopened. An Axios reporter said on X that Iran had dropped more mines in the strait earlier this week, shortly after US Defense Secretary Pete Hegseth warned that further mining attempts would violate ceasefire terms.