Oil prices surged significantly on Monday, extending gains as efforts to end the Iran conflict appeared to stall. This followed a drone attack on a nuclear power plant in the United Arab Emirates and expectations that U.S. President Donald Trump would discuss military options against Iran. Brent crude futures rose by $1.65, or 1.51%, to $110.91 per barrel, briefly reaching $112 during the session—the highest level since May 5. U.S. West Texas Intermediate crude futures increased by $2, or 1.9%, to $107.42 per barrel, after climbing to $108.70 earlier, marking the highest point since April 30.
The escalation of geopolitical tensions contributed to the rise. Last week, both major crude contracts gained over 7% as hopes for a peace agreement to halt attacks and detentions of vessels in the critical Strait of Hormuz dwindled. Following high-level talks between China and the U.S., the world's largest oil importer did not indicate it would assist in resolving the conflict sparked by U.S. and Israeli strikes on Iran. Drone attacks targeting the UAE and Saudi Arabia, along with rhetoric from the U.S. and Iran, have fueled concerns about further conflict escalation.
IG market analyst Tony Sycamore noted that these drone attacks serve as a clear warning—new strikes by the U.S. or Israel on Iran could trigger additional proxy attacks by Iran or its regional allies on Gulf energy and critical infrastructure. UAE officials stated they are investigating the source of the attack on the Barakah nuclear power plant and added that the UAE reserves the full right to respond to such "terrorist attacks." Saudi Arabia intercepted three drones entering its airspace from Iraq and warned it would take necessary action in response to any attempts to violate its sovereignty and security.
According to Axios, Trump is expected to meet with senior national security advisors on Tuesday to discuss military options against Iran. In moves that could support oil prices, the Trump administration allowed a sanctions waiver to expire on Saturday. This waiver had previously permitted countries, including India, to purchase Russian seaborne oil after a one-month extension.
Vandana Hari, founder of oil market analysis firm Vanda Insights, commented that fears of new strikes on Iran are exacerbating supply concerns, and the U.S. allowing the Russian sanctions waiver to expire does not help ease the situation.
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