By Zoey
Oil prices climbed sharply on Monday, extending last week’s rally as mounting tensions in the Middle East fueled concerns over potential disruptions to global energy supplies and shipping routes.
Brent crude futures rose $1.44, or 1.32%, to $110.70 a barrel in early trading after earlier reaching their highest level since May 5. U.S. West Texas Intermediate crude advanced $1.84, or 1.75%, to $107.26 a barrel after touching its strongest level since May 4.
The latest gains came as hopes for a diplomatic breakthrough in the conflict involving the United States, Israel and Iran continued to fade. Investors increasingly fear that the confrontation could escalate into a broader regional conflict capable of threatening oil infrastructure and tanker traffic across the Gulf.
Crude benchmarks have already surged more than 7% over the past week as traders reacted to growing instability around the Strait of Hormuz, one of the world’s most strategically important shipping chokepoints through which a significant portion of global crude exports passes each day.
Market sentiment deteriorated further after reports of a strike targeting the Barakah nuclear power plant in the United Arab Emirates, raising alarm across energy markets and among Gulf states. Emirati authorities said they had launched an investigation into the source of the attack and warned that the country reserved the right to respond to what officials described as “terrorist attacks.”
The incident marked one of the most serious security breaches in the Gulf region in recent months and intensified concerns that critical energy and infrastructure facilities could increasingly become targets as regional tensions escalate.
Saudi Arabia also reported heightened military activity after intercepting three drones that entered its airspace from Iraq. Saudi officials said the kingdom would take all necessary operational measures to protect its sovereignty and national security against any future threats.
The latest developments added to fears that Iran-aligned groups across the region could intensify attacks on Gulf energy infrastructure if military action involving Tehran widens. Traders are now closely watching Washington for signals on possible next steps after reports indicated U.S. President Donald Trump was expected to meet advisers to discuss military options related to Iran.
Last week’s discussions between Trump and Chinese President Xi Jinping failed to produce any indication that Beijing would play a more active role in easing tensions or helping broker a resolution to the conflict. China remains the world’s largest crude importer and a major buyer of Middle Eastern oil, making its diplomatic position closely watched by global markets.
Analysts said the combination of stalled diplomacy, drone attacks and rising military rhetoric from both Washington and Tehran has significantly increased the geopolitical risk premium embedded in oil prices.
IG market analyst Tony Sycamore said the latest drone strikes served as a warning that any renewed military action by the United States or Israel against Iran could trigger additional attacks by Iranian proxies on Gulf energy facilities and other critical infrastructure.
Investors are also monitoring shipping activity in the Strait of Hormuz amid concerns that escalating hostilities could lead to further attacks on commercial vessels or disruptions to maritime trade routes. Any prolonged interruption in Gulf exports could tighten global crude supplies at a time when markets are already grappling with concerns over inventories and production stability.
The renewed surge in oil prices has also reignited worries about inflationary pressure on major economies, as higher energy costs threaten to increase transportation and manufacturing expenses worldwide. Financial markets are expected to remain volatile as traders assess whether diplomatic efforts can still prevent the conflict from expanding further across the region.
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