Oil Prices Climb as Middle East Conflict Raises Supply Concerns

BY COMFORT OGBONNA

Oil prices moved higher on Monday as growing tensions in the Middle East fueled fears of supply disruptions, while diplomatic efforts to ease the conflict involving Iran showed little progress.

Brent crude futures rose $1.65, or 1.51%, to $110.91 a barrel during early trading, after earlier touching $112 per barrel, the highest level recorded since May 5. U.S. West Texas Intermediate crude also advanced sharply, gaining $2, or 1.9%, to trade at $107.42 a barrel after briefly reaching $108.70, its strongest level since April 30.

The latest rally follows a strong surge last week, when both major oil benchmarks climbed more than 7% amid rising uncertainty surrounding the conflict and fears over the security of energy supply routes in the Gulf region.

Investor concerns intensified after reports that a nuclear power facility in the United Arab Emirates came under attack, adding to worries that the conflict could spread further across key oil-producing regions. The Barakah nuclear power plant, one of the Gulf’s most strategically important energy facilities, was reportedly targeted in a drone strike that Emirati authorities described as a terrorist attack.

Officials in the UAE said investigations were underway to determine the source of the attack, while also stressing that the country reserved the right to respond decisively to threats against its security and infrastructure.

Saudi Arabia also reported heightened security activity after intercepting three drones that entered its airspace from Iraq. Saudi officials warned they would take all necessary operational measures to protect national sovereignty and maintain regional stability.

The escalating tensions have increased fears that vital energy infrastructure across the Gulf could become targets in a broader regional confrontation. Analysts say the possibility of further attacks on oil facilities, shipping routes, or export terminals could significantly disrupt global crude supplies and push prices even higher.

The Strait of Hormuz, a narrow waterway connecting the Persian Gulf to global shipping lanes, remains a major focus for markets because roughly a fifth of the world’s oil supply passes through the route. Continued ship attacks and seizures in the region have already disrupted confidence among traders and shipping companies.

Last week’s discussions between U.S. President Donald Trump and Chinese President Xi Jinping ended without any major breakthrough on resolving the conflict involving Iran. Market participants had hoped China, as the world’s largest crude oil importer and a key Iranian trade partner, might play a role in helping ease tensions.

Instead, concerns deepened as both Iran and the United States exchanged increasingly aggressive rhetoric, while reports of proxy attacks across the region raised fears of wider instability.

IG market analyst Tony Sycamore said the recent drone strikes appeared to be a warning that further military action against Iran could trigger additional attacks on Gulf energy infrastructure by Tehran or groups aligned with it.

Meanwhile, reports indicated that President Trump is expected to meet senior national security advisers on Tuesday to review possible military responses regarding Iran, adding another layer of uncertainty for global markets.

Oil prices also found support after the Trump administration allowed a sanctions waiver on Russian seaborne oil purchases to expire. The waiver had temporarily permitted countries including India to continue buying Russian oil despite sanctions. Analysts believe the move could tighten global crude supply further, especially as geopolitical tensions continue to threaten energy exports from multiple regions.

Vandana Hari, founder of oil market analysis firm Vanda Insights, said fears surrounding renewed strikes on Iran and tighter restrictions on Russian oil exports have significantly increased concerns over global supply availability.

Energy traders are now closely monitoring developments in the Gulf region, with many warning that any further escalation involving Iran, Saudi Arabia, or the UAE could trigger another sharp spike in crude prices and add inflationary pressure to the global economy.