Oil prices pushed higher during Monday's Asian deals as renewed military activity in the Middle East increased concerns over energy supply disruptions and cast doubt on prospects for an extension of the ceasefire between the United States and Iran.
By 2:30 pm AEST (4:30 am GMT), Brent crude futures were up $2.29, or 2.5%, at $93.41 a barrel, while West Texas Intermediate crude futures gained $2.46, or 2.8%, to $89.79 a barrel.
The gains followed reports that Israeli Prime Minister Benjamin Netanyahu had ordered troops to advance further into Lebanon in operations against the Iranian-backed Hezbollah militant group, despite a ceasefire announced more than six weeks ago.
At the same time, U.S. Central Command said on Sunday that it had conducted "self-defence strikes" against Iranian radar and drone-control facilities at Goruk and Qeshm Island over the weekend.
Washington said the action was taken in response to what it described as "aggressive" activities by Tehran.
The latest military developments weakened expectations that Washington and Tehran would soon announce an extension to their ceasefire arrangement.
Optimism surrounding those negotiations had helped push Brent and WTI crude lower on Friday, when the contracts settled down 1.8% and 1.7%, respectively.
U.S. President Donald Trump said on Friday that he would soon make a decision on a proposed agreement designed to extend the ceasefire and provide negotiators with additional time to pursue a permanent resolution to the conflict and address longstanding disputes surrounding Iran's nuclear programme.
However, reports over the weekend indicated that further amendments were being made to the draft agreement, suggesting negotiations remain ongoing.
The Strait of Hormuz remains a critical chokepoint for global energy markets, handling approximately one-fifth of worldwide oil and gas shipments. Iran has effectively closed the waterway since the conflict began following U.S. and Israeli strikes in February, significantly disrupting global energy flows.
Concerns about the route's security have intensified in recent weeks as commercial shipping traffic gradually returned, only for several vessels to reportedly come under attack.
ANZ analysts said supply risks remain elevated despite increased vessel movements through the region.
“The Strait of Hormuz remains closed, disrupting more than 15mb/d of world oil supply. The number of vessels taking on the risky transit has increased in recent weeks, but several have come under attack in recent days, underscoring the risks that remain for shipowners and crew.”
