Oil prices climbed in early Asian trade on Monday after Israel and Iran launched fresh attacks on Sunday, heightening fears that escalating battle could trigger a broader regional conflict and widely disrupt oil exports from the Middle East.
Brent crude futures were up $1.70, or 2.3%, to $75.93 a barrel by 2253 GMT, while U.S. West Texas Intermediate crude futures gained $1.62, or 2.2%, to $74.60. They had surged more than $4 earlier in the session. Both benchmarks settled 7% higher on Friday, having surged more than 13% during the session to their highest levels since January. The latest exchange of strikes between Israel and Iran resulted in civilian casualties and intensified fears of a broader regional conflict, with both militaries urging civilians on the opposing side to take precautions against further strikes.
The latest developments have stoked concerns about disruptions to the Strait of Hormuz, a vital shipping passage.
About a fifth of the world’s total oil consumption passes through the strait, or some 18 to 19 million barrels per day (bpd) of oil, condensate and fuel.
U.S. President Donald Trump said on Sunday he hopes Israel and Iran can broker a ceasefire, but said sometimes countries have to fight it out first. Trump said the U.S. will continue to support Israel but declined to say if he asked the U.S. ally to pause its strikes on Iran.
German Chancellor Friedrich Merz said he hoped a meeting of the Group of Seven leaders convening in Canada on Sunday would reach an agreement to help resolve the conflict and keep it from escalating. Meanwhile, Iran has told mediators Qatar and Oman that it is not open to negotiating a ceasefire while under Israeli attack, an official briefed on the communications told Reuters on Sunday, as the two foes launched fresh attacks and raised fears of a wider conflict.
Iran, a member of the Organization of the Petroleum Exporting Countries, currently produces around 3.3 million bpd, and exports more than 2 million bpd of oil and fuel.
The spare capacity of OPEC and its allies, including Russia, to pump more oil to offset any disruption is roughly equivalent to Iran’s output, according to analysts and OPEC watchers.
(Reporting by Yuka Obayashi in Tokyo; Editing by Matthew Lewis and Paul Simao)