On June 1, world oil prices rose sharply in the first trading session of the week after Israel ordered its army to go deeper into Lebanese territory in a confrontation with Hezbollah forces, despite a ceasefire announced more than 6 weeks ago.
As of 00:28 GMT, US WTI crude oil price increased by 2.37 USD, equivalent to 2.71%, to 89.73 USD/barrel. Brent oil increased by 2.16 USD, equivalent to 2.37%, reaching 93.28 USD/barrel.
The increase in oil prices appeared in the context of the Israeli-Lebanese conflict escalating again. According to published information, Israel has requested military forces to expand deeper offensive operations into Lebanon to counter Hezbollah.
This conflict is considered the largest spread of the conflict related to Iran. Fighting began on March 2 when Hezbollah launched missiles and drones across the border to support its Iranian ally. The two sides reached a ceasefire in mid-April but gunfights continued.
The new developments took place just days after the US held peace talks between Israel and Lebanon in Washington. The increasingly tense war situation has weakened expectations that the US and Iran could soon announce an extension of the ceasefire agreement.
Previously, the market had reacted positively to the prospect of extending the ceasefire between Washington and Tehran. In the last session of last week, Brent and WTI oil closed the session up 1.8% and 1.7% respectively.
US President Donald Trump said he will soon make a decision on the proposal to extend the ceasefire announced in early April. This plan aims to create more time for negotiators to find a solution to end the conflict and resolve disagreements related to Iran's nuclear program.
According to published information, Israel will play an important role in any agreement. Iran has also repeatedly affirmed that Hezbollah must be included in related discussions.
Besides the military factor in Lebanon, the oil market is also affected by concerns about maritime security in the Strait of Hormuz. IG analyst Tony Sycamore said that the risk of mines appearing on this strategic oil and gas transport route may slow down the process of reopening the strait.
Mr. Tony Sycamore believes that even if an agreement is signed, new supply will not increase sharply immediately. This means that pressure on the energy market may extend further.
