Oil prices rose by more than 3% on Monday as tensions between Iran and the United States intensified despite ongoing diplomatic efforts and a fragile ceasefire.
The latest escalation followed Iranian claims that it had targeted a U.S.-linked military base in response to American strikes on Iranian military facilities over the weekend. The U.S. military said it had carried out attacks on Iranian air defence systems, a ground control station and drones it described as threats to shipping in the region.
Kuwait also reported missile and drone attacks and activated its air defence systems, condemning the strikes as a threat to regional stability. U.S. officials said two Iranian ballistic missiles aimed at American forces in Kuwait were intercepted and no casualties were recorded.
The renewed hostilities have raised concerns about energy supplies from the Middle East, particularly through the Strait of Hormuz, a key route for global oil and liquefied natural gas exports. Market fears over potential disruptions to shipping traffic helped drive oil prices higher.
Despite the tensions, U.S. President Donald Trump said he believed Iran was still interested in reaching a deal to end the conflict. However, Iranian officials accused Washington of sending mixed messages and changing its negotiating positions during ongoing talks.
Iranian Foreign Minister Abbas Araqchi warned that violations of ceasefire agreements in the region could undermine broader peace efforts, while Tehran continued to link its dispute with Washington to Israel’s military operations in Lebanon.
The conflict, which began in late February, has resulted in thousands of deaths across Iran and Lebanon and has had a significant impact on global energy markets. Iran’s restrictions on movement through the Strait of Hormuz have been a major source of concern for oil traders and shipping companies.
Meanwhile, Israel has expanded military operations against Hezbollah in Lebanon, adding another layer of uncertainty to efforts to reduce tensions across the region.
Analysts say oil markets are likely to remain sensitive to developments in the Middle East, with investors closely watching negotiations between Washington and Tehran and the security situation around key energy export routes.
